Section 125 POP Plan

The name “Section 125 Plan”  POP, derives from Title 26, Section 125 of the United States tax code. This law outlines the rules employers must follow when establishing a cafeteria plan. It defines the term cafeteria plan and describes the types of benefits such a policy may include. The law prohibits programs that discriminate against lower-paid workers by favoring those who have high compensation. If you are found to be discriminatory, the benefits it provides to highly-paid workers will be taxed.

The 125 plan or POP Plan includes health, dental, accidental death and dismemberment, and even voluntary benefits. Volunteer benefits include examples such as cancer, accident, and other benefits. IRS tax laws require a 125 Premium Only Plan (POP) or a Flexible Spending Account (FSA) to pay medical, dental, and other eligible insurance premiums on a pretax basis.

Not only do employees keep more money in their pockets, you, as the employer, will save money, lower your taxes paid towards the employee’s Social Security match. HR Service Inc. POP Solutions, combined with our Premium Only Plan, is so convenient. You can easily create your plan documents and summary plan description using our web-based tool and easily make any needed updates. Additionally, we keep your document current when there are changes in the IRS requirements. We provide everything you need for a formal plan document. Best of all, it only takes a few minutes to create. 

Also, we offer a tool to complete year-end non-discrimination testing that is required each year. Our staff is ready to assist you with anything. If you have any questions about how a Section 125 plan will benefit you and your employees, or what you need to submit, please contact us.