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Will the participation in a Sec. 125 reduce the compensation that is used to calculate my benefits under a qualified retirement plan?

April 26, 2017Benefits CALCULATE compensation participation qualified reduce retirement plan sec Used

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Will the participation in a Sec. 125 reduce the compensation that is used to calculate my benefits under a qualified retirement plan?

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Possibly. You should contact your plan administrator to confirm that participating in the Cafeteria plan will not reduce your retirement benefits. The definition of compensation under the retirement plan should be amended to exclude any salary redirection under the Sec. 125 plan to eliminate the “penalty” on the retirement benefits of participating in the Cafeteria plan.