Section 125 Plan Documents

Enable your employees to pay for qualified benefits with pre-tax dollars — while saving your organization money on payroll taxes.

What Is a Section 125 Cafeteria Plan?

A Section 125 cafeteria plan is an IRS-authorized benefit plan that allows employees to choose between receiving taxable cash compensation or selecting from a menu of qualified pre-tax benefits. These plans are one of the most effective ways for both employers and employees to reduce their tax burden while providing meaningful coverage.

Common benefits funded through a Section 125 plan include health insurance premiums, health savings accounts (HSAs), flexible spending accounts (FSAs), dependent care assistance, and supplemental insurance options.

IRS Compliance Requirements

The IRS requires employers offering pre-tax benefits to maintain a formal, written Section 125 plan document. Without proper documentation, your employees\u2019 pre-tax deductions could be disallowed — resulting in back taxes, penalties, and significant liability for your organization.

  • A written plan document must be adopted before the plan year begins
  • The plan must describe all benefits offered and eligibility rules
  • Election procedures and mid-year change rules must be documented
  • The plan must comply with non-discrimination requirements under IRC §125
  • Annual amendments may be required to reflect regulatory changes

Plan Document Creation & Maintenance

Catapult provides full-service Section 125 plan document creation and ongoing maintenance so your organization stays compliant year after year.

  • Custom plan document drafting tailored to your benefits offering
  • Summary Plan Description (SPD) for employee distribution
  • Annual plan document reviews and amendments
  • Guidance on mid-year election change events
  • Support during IRS or DOL audits related to your cafeteria plan

Tax Savings for Employers & Employees

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Employee Tax Savings

Employees reduce their taxable income by paying for eligible benefits with pre-tax dollars, lowering their federal income tax, Social Security, and Medicare withholdings.

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Employer FICA & FUTA Savings

Employers save on their matching share of Social Security and Medicare taxes (FICA) plus federal unemployment taxes (FUTA) on every dollar employees contribute pre-tax.

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Recruitment & Retention

A well-structured cafeteria plan is a powerful tool for attracting top talent and retaining employees who value comprehensive, tax-efficient benefits.

Get Your Section 125 Plan Documents in Order

Catapult\u2019s compliance team will ensure your cafeteria plan meets every IRS requirement — so you can focus on your people, not paperwork.

Contact Catapult