Cafeteria Benefits And Your Workforce

Cafeteria Benefits and​ your​ Workforce
Especially if​ you​ happen to​ be one of​ those unflinchingly ambitious microbusiness entrepreneurs, I’ve been reading about everyday in​ pubs like Crain’s Chicago Business, you’ll eventually find that designing and​ offering up an attractive employeebenefits package will be an essential component of​ your​ future growth. An attractive health plan will do just that attract helping you​ recruit and​ retain​ crucial employees meaning those fought over creative class/knowledge worker types Richard Florida is​ always yammering about. You’ll also find that a​ generous group plan will help link your​ employees interests to​ your​ concern’s.
That said, there are a​ seemingly unlimited number of​ group benefits options to​ consider. One that you’ll want to​ move to​ the top of​ your​ list is​ a​ Cafeteria Plan. The cafeteria brand​ of​ benefit plan can add a​ lot freedom to​ a​ employee compensation​ package, allowing your​ workforce to​ choose benefits options ala carte, if​ you​ will selecting only the benefit options they’re most interested in.
Perhaps I ​ should start closer to​ the beginning … cafeteria plans, also known as​ the flexible spending account, the choice spending account or​ the section​ 125 plan, have become increasingly popular over the last few years because they’re designed to​ offer employees a​ truly convenient way to​ pay medical expenses with pretax dollars; relieving them of​ the burden of​ federal, and​ state taxes.
To take advantage of​ a​ flexible spending account, eligible employees set aside a​ predesignated amount each year, in​ order to​ pay for​ medical expenses aren’t already eligible for​ coverage. The two most common​ types of​ flexiblespending accounts are dependent care reimbursement also known as​ DCRAs and​ health care reimbursement accounts. Employees pay for​ nonreimbursed expenses from these accounts. Unfortunately, flexiblespending accounts are useitorloseit accounts; meaning that any funds leftover at​ the end of​ the year can’t be rolled over, so to​ speak.
Exceptions to​ Those Limits Apply to​ Key Employees
Typically, funds set aside in​ a​ cafeteria plans flexiblespending account are exempt from income, payroll, and​ unemployment taxes. this​ exemption​ generally also applies to​ payroll and​ unemployment taxes paid on​ behalf of​ employees. Take a​ look at​ IRS Pub. 15B for​ exceptions, including treatment of​ highly compensated employees and​ certain​ shareholders of​ Subchapter S Corporation’s.
Premiums paid to​ a​ group life benefits policy are typically exempt from income and​ unemployment taxes. in​ addition, premiums paid for​ up to​ $50,000. 00 of​ benefits coverage per employee tend to​ be exempt from payroll taxes. for​ additional details, see IRS Publication​ 15B.
you​ see, cafeteria plans offer you​ some versatility in​ putting together a​ benefits plan for​ your​ workforce. There are other categories of​ fringe benefits that you​ can offer your​ employees in​ a​ cafeteria plan that may be excluded from taxable income under IRS benefitexclusion​ rules. Using a​ flexiblespending account namely, establishing a​ DCRA and​ HCRA may help to​ jumpstart a​ cafeteria plan for​ your​ workforce. if​ you​ maintain​ a​ cafeteria plan, the IRS requires you​ to​ complete IRS Form 5500.
To help you​ keep track of​ employmentrelated costs, the U. S. Bureau of​ Labor Statistics BLS publishes a​ quarterly statistic called the employment cost index. The cost index measures changes in​ employeecompensation​ costs, which include salaries, wages, and​ benefits. in​ addition​ to​ publishing the quarterly cost index, BLS publishes an annual survey of​ compensation​ costs.
One last thing … the information​ above is​ practically for​ entertainment purposes and​ shouldn’t be interpreted as​ financial advice. for​ advice specific to​ your​ firm’s circumstances, don’t hesitate get advice from a​ financial, tax or​ benefits consultant. you​ may even want to​ flat out hire an Interim benefits consultant or​ a​ full service benefits consulting firm. There are also a​ number of​ good sources of​ information​ on​ the Web you​ can take advantage of. The Employee Benefits Research Institute EBRI, International Foundation​ of​ Employee Benefit Plans IFEBP, and​ American Benefits Council are independent sources of​ truly actionable employeebenefit plan information.

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