A P.O.P. (Section 125 Plan) provides for tax-exempt treatment of employee premium contributions to certain employer-sponsored group benefits plans. These types of plans include medical, dental & vision plans. Employees pay their premiums with “before tax” dollars. This increases their take home pay. Since taxable payroll is reduced, the employer pays less in FICA taxes. This could mean big money for both the employer and the employee. For example if employees pay $5000 per month towards qualified benefits, or $60,000 per year, the FICA match on this amount is $60,000 x 7.65% = $4,590.00. Both the employer would save this on taxes AND the employees. So this adds up to big savings for all.
Premium only plans were created through Section 125 of the IRS Code; because of this, they are sometimes referred to as “Section 125″. Give us a call at 321-441-9056 if you have any questions about these plans.