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Section 125 Cafeteria Plans

Professional Benefit Administrators, Inc. (PBA) has administered these programs since 1989. Section 125 of the Internal Revenue Code allows for special tax treatment, avoiding taxation for qualified medical and dependent care expenses.

A cafeteria plan, including flexible spending accounts allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages.

Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay.

In 2003, Flex Debit Cards were allowed by the IRS. Implementation of this service should increase your FSA participation to 35% or more over a 2-year period.