W2 what is other cafe 125

Only specific types of coverage must be reported; others aren't required or are optional. For example, your employer must report the cost of major medical, but your contributions to a health flexible spending account aren't reportable. The data in Box 12 is for informational purposes only, so employees know the cost of their health coverage. Your employer may also use Box 12 to report certain retirement plan contributions and nontaxable moving expenses, under the required codes. If you have a Section dependent care plan, your employer must report any amounts it and you paid toward your account in Box Amounts over the limits are taxable and must go in your taxable wages in Boxes 1, 3 and 4.

The cafeteria plan amounts on your W-2 don't change your tax preparation and filing process. Since you paid your premiums with pretax money, the amounts are already deducted from your taxable wages in Box 1.

Grace Ferguson has been writing professionally since With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm.

A section plan is the only means by which an employer can offer employees a choice between taxable and nontaxable benefits without the choice causing the benefits to become taxable. A plan offering only a choice between taxable benefits is not a section plan.

The plan may make benefits available to employees, their spouses and dependents. It may also include coverage of former employees, but cannot exist primarily for them. See the questions below for treatment of benefits made available to individuals who are not spouses or dependents of the employee.

Generally, no. If you only have a cafeteria plan, you are not required to file Form or Schedule F. However, if you have a welfare benefit plan, you may be required under Department of Labor regulations to file a return for that plan. Please see the Form Instructions or contact the U. Department of Labor for more information. Assistance is also available from our Customer Account Services office.

Employer contributions to the cafeteria plan are usually made pursuant to salary reduction agreements between the employer and the employee in which the employee agrees to contribute a portion of his or her salary on a pre-tax basis to pay for the qualified benefits. Salary reduction contributions are not actually or constructively received by the participant.

Therefore, those contributions are not considered wages for federal income tax purposes. The above discussion provides only the most basic rules governing a cafeteria plan. For a complete understanding of the rules, see the Proposed Regulations under Code section Section plans must pass three nondiscrimination tests designed to determine if the plan discriminates in favor of highly compensated or key employees of the business: eligibility to participate, benefits and contributions, and concentration tests.

Cafeteria plans have different levels of benefits. A premium-only plan POP allows employees to pay their portion of insurance on a pretax basis. The flexible spending account FSA version allows for out-of-pocket qualified expenses to be paid pretax, which is the style of the plan described above. The full-blown plan is called a consumer-driven healthcare CDHC plan and involves a credit system the employee can use on a discretionary basis for qualified expenses. Employees can then supplement the CDHC with their own money and use it to buy additional benefits or coverage.

Employers must hire and partner with a qualified Section third-party administrator, who can provide the most up-to-date documentation for setting up a plan and update the employer on the latest requirements necessary for compliance.

Typical third-party administrators provide employers with an up-to-date plan document, summary plan descriptions, corporate resolution, any customized forms, legal review, attorney opinion letters, discrimination testing, a signatory-ready Form if required, and employee education. A Section plan typically lets employees use pretax money to pay for health insurance premiums medical, dental, vision.

Other options include retirement deposits, supplemental life or disability insurance, Health Savings Accounts, and various medical or dependent care expenses. A Section premium-only plan POP is a cafeteria plan that allows employees to pay their health insurance premiums with tax-free dollars. As the name implies, these premiums are the only expense funds can cover.

The premiums can be for employer-sponsored insurance plans or individual health policies. POPs are one of the most common types of Section plans. The Section rules specifically prohibit the following individuals from participating in plans:. Cafeteria Plan Advisors. Internal Revenue Service.

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What Is a Section Plan? Who Can Open a Section Plan?