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SECTION 125 FLEXIBLE BENEFIT PLAN ENROLLMENT GUIDE FOR THE EMPLOYEES OF THE CITY OF FORT WORTH FOR THE PLAN YEAR JANUARY 1, 2009, DECEMBER 31, 2009 2 Dear City of Fort Worth Employee, Ben Franklin

How to fill out section 125 plan

How to fill out section 125 plan?

1. Gather necessary information: Before starting the process, make sure you have all the required information, such as the names and addresses of participating employees, their chosen benefits, and the effective dates of the plan.
2. Choose a third-party administrator: Section 125 plans require the involvement of a third-party administrator (TPA). Research and select a reputable TPA that specializes in administering these types of plans.
3. Review plan options: Work with the TPA to determine the plan options available to your employees. These could include flexible spending accounts (FSAs) for healthcare or dependent care, as well as other pre-tax benefits like health savings accounts (HSAs) or parking and transit benefits.
4. Communicate the plan to employees: Once the plan options are determined, inform your employees about the available benefits and how they can participate. Provide them with enrollment forms and any necessary instructions.
5. Collect enrollment forms: Set a deadline for employees to submit their enrollment forms. Collect all the forms and review them for completeness and accuracy.
6. Set up payroll deductions: With the help of the TPA, set up the necessary payroll deductions to ensure that the employees' contributions to the section 125 plan are withheld from their salaries on a pre-tax basis.
7. Coordinate with insurance providers: If the section 125 plan includes insurance benefits, coordinate with the insurance providers to ensure that the coverage is properly set up for participating employees.

Who needs a section 125 plan?

1. Small business owners: Section 125 plans are especially beneficial for small business owners who want to offer employee benefits but may not have the budget to cover the costs entirely.
2. Employers looking to attract and retain talent: Offering pre-tax benefits through a section 125 plan can be an attractive incentive for potential employees. It can also help employers retain their current workforce by providing valuable benefits.
3. Employees seeking tax savings: Employees who are looking to reduce their taxable income can benefit from participating in a section 125 plan. By contributing to pre-tax benefits like FSAs or HSAs, they can lower their overall tax liability.
4. Companies with diverse benefit offerings: Section 125 plans allow employers to offer a variety of benefits to their employees, giving them the flexibility to choose the ones that best meet their individual needs.
5. Businesses looking to streamline benefits administration: Implementing a section 125 plan can help businesses centralize their benefits administration processes. It allows for simplified enrollment, payroll deductions, and coordination with insurance providers, ultimately saving time and reducing administrative burdens.

For pdfFiller’s FAQs

What is section 125 plan?

A section 125 plan, also known as a cafeteria plan, is a type of employee benefits plan that allows employees to choose between receiving their compensation in cash or electing to receive certain qualified benefits on a pre-tax basis.

Who is required to file section 125 plan?

Employers offering section 125 plans are required to file the plan with the IRS.

How to fill out section 125 plan?

Employers can work with an employee benefits specialist or consultant to help design and implement a section 125 plan.

What is the purpose of section 125 plan?

The purpose of a section 125 plan is to allow employees to save money on taxes by opting for certain benefits on a pre-tax basis.

What information must be reported on section 125 plan?

The section 125 plan must include details on the benefits offered, eligibility requirements, employee contribution amounts, etc.

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