Two Types of Section 125 Cafeteria Plans: POPs and FSAs

Premium Only Plans (POPs)

There are two types of Section 125 Cafeteria Plans. Premium only Cafeteria Plans (usually called "POPs") are designed to reduce taxes on insurance premiums only. The portion of the premiums paid by the employee can be pre-taxed under the plan. Most insurance premiums qualify. For many groups, setting up a POP is all that is required for both the company and its employees to realize substantial tax-savings. It is important to make sure your plan is in compliance with IRS regulations, because noncompliance can result in heavy IRS fines. We can furnish a qualified POP plan to the employer and keep the plan current for a modest cost. In many cases, that modest fee can be reduced to zero by taking advantage of a voluntary employee benefit portfolio.

Other sources of POP Plans are available. CPA and law firms can often offer POP plans, but the cost is generally high. The only consistently high quality administration available at an affordable price will probably be through a professional Third Party Administrator.




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