Assignment 6
Qualified Benefits in a cafeteria plan > Benefits permitted for inclusion in a cafeteria plan - ANSa)
Employer-provided accident or health coverage under IRC Section 106 and 106; including health,
medical, hospitalization coverage, prescription plans, over the counter drugs, dental and vision
programs, disability insurance and coverage under an AD&D policy
b) Individually owned accident or health insurance policies may be offered under a cafeteria plan,
provided the employer requires an accounting to ensure that the health insurance is in force and is
being paid by the employee
c) Employer-provided group term life insurance coverage excludable from income under IRC Section 79
or includable in income solely because the benefit exceeds the $50,000 limit of IRC Section 79
d) Employer-provided dependent care assistance under IRC Section 129
e) Employer-provided adoption assistance under IRC Section 137
f) 401(K) plan or purchase of retiree group term life insurance by participants employed by certain
educational institutions described in IRC section 170(b)(1)(a)(ii)
g) Contribution to HSA under IRC 223
Qualified Benefits in a cafeteria plan > Taxable benefits paid through Cafeteria plans - ANSa) Some
benefits paid through cafeteria plans are taxable
b) taxable benefits is a benefit that results in taxable income for the employee when it is received and a
tax deduction for the employer when it is paid.
c) Most common is cash, paid time-off days and group term life insurance in excess of $50,000
Qualified Benefits in a cafeteria plan > Benefits prohibited from inclusion in cafeteria plans - ANSa)
Contributions to medical savings accounts under IRC Section 106(b)
b) Qualified scholarships under IRC Section 117
c) EAPs under IRC Section 127
d) Certain fringe benefits under IRC Section 132
e) Qualified long-term care insurance under IRC Section 7702B
f) Archer Medical Savings Account
g) Athletic facilities
h) De minimis (minimal) benefits
, i) Dependent Life Insurance
j) Employee discounts
k) Lodging on the business premises
l) Meals
m) Moving expense reimbursement
n) No additional cost services
o) Parking and Mass Transit Reimbursement
p) Contributions to an IRC Section 529 college savings account
q) Legal assistance
r) Financial assistance
s) Elective deferrals to a Section 403(b) plan
t) HRAs
Plan Stakeholders > Eligible Employers - ANSa) Employer with employees who are subject to taxation
under U.S. tax law
b) Self employed individuals described in Section 401(c), including sole proprietors, partners in
partnership and 2% or greater shareholders in an S-corporation are ineligible BUT may sponsor a Section
125 plan for their bonafide employees
Plan Stakeholders > Eligible Employees - ANSa) Present and former employees including common law
employees, leased employees described in 414(m) and full time life insurance salesman
b) Sole proprietor or partnership may sponsor cafeteria plan for its common law employees
c) The spouse of a self employed individual is a bonafide employee and may participate in cafeteria plan
as an employee
Plan Stakeholders > Salary Reduction Agreement - ANSa) Agreement made between an employee and
employer allowing the employee to deter salary and thus avoid constructive receipt of the
compensation
b) In lieu of paying compensation to the employee, the employer contributes the amount agreed upon
toward the cost of certain benefits
c) Employer can pay benefits on a tax favored basis
d) The deferred sums are not subject to FICA or FUTA
Qualified Benefits in a cafeteria plan > Benefits permitted for inclusion in a cafeteria plan - ANSa)
Employer-provided accident or health coverage under IRC Section 106 and 106; including health,
medical, hospitalization coverage, prescription plans, over the counter drugs, dental and vision
programs, disability insurance and coverage under an AD&D policy
b) Individually owned accident or health insurance policies may be offered under a cafeteria plan,
provided the employer requires an accounting to ensure that the health insurance is in force and is
being paid by the employee
c) Employer-provided group term life insurance coverage excludable from income under IRC Section 79
or includable in income solely because the benefit exceeds the $50,000 limit of IRC Section 79
d) Employer-provided dependent care assistance under IRC Section 129
e) Employer-provided adoption assistance under IRC Section 137
f) 401(K) plan or purchase of retiree group term life insurance by participants employed by certain
educational institutions described in IRC section 170(b)(1)(a)(ii)
g) Contribution to HSA under IRC 223
Qualified Benefits in a cafeteria plan > Taxable benefits paid through Cafeteria plans - ANSa) Some
benefits paid through cafeteria plans are taxable
b) taxable benefits is a benefit that results in taxable income for the employee when it is received and a
tax deduction for the employer when it is paid.
c) Most common is cash, paid time-off days and group term life insurance in excess of $50,000
Qualified Benefits in a cafeteria plan > Benefits prohibited from inclusion in cafeteria plans - ANSa)
Contributions to medical savings accounts under IRC Section 106(b)
b) Qualified scholarships under IRC Section 117
c) EAPs under IRC Section 127
d) Certain fringe benefits under IRC Section 132
e) Qualified long-term care insurance under IRC Section 7702B
f) Archer Medical Savings Account
g) Athletic facilities
h) De minimis (minimal) benefits
, i) Dependent Life Insurance
j) Employee discounts
k) Lodging on the business premises
l) Meals
m) Moving expense reimbursement
n) No additional cost services
o) Parking and Mass Transit Reimbursement
p) Contributions to an IRC Section 529 college savings account
q) Legal assistance
r) Financial assistance
s) Elective deferrals to a Section 403(b) plan
t) HRAs
Plan Stakeholders > Eligible Employers - ANSa) Employer with employees who are subject to taxation
under U.S. tax law
b) Self employed individuals described in Section 401(c), including sole proprietors, partners in
partnership and 2% or greater shareholders in an S-corporation are ineligible BUT may sponsor a Section
125 plan for their bonafide employees
Plan Stakeholders > Eligible Employees - ANSa) Present and former employees including common law
employees, leased employees described in 414(m) and full time life insurance salesman
b) Sole proprietor or partnership may sponsor cafeteria plan for its common law employees
c) The spouse of a self employed individual is a bonafide employee and may participate in cafeteria plan
as an employee
Plan Stakeholders > Salary Reduction Agreement - ANSa) Agreement made between an employee and
employer allowing the employee to deter salary and thus avoid constructive receipt of the
compensation
b) In lieu of paying compensation to the employee, the employer contributes the amount agreed upon
toward the cost of certain benefits
c) Employer can pay benefits on a tax favored basis
d) The deferred sums are not subject to FICA or FUTA
