A 125 Plan, often called a Cafeteria Plan or Flex Plan, is an Employer plan by which Employees may pay for certain costs on a Pre-tax basis. Covered costs often include health insurance premiums and child care. Such plans allow Employee Participants to defer Pre-tax dollars to invest for future retirement needs. The normal investment vehicles are Annuities, Variable Annuities and Mutual Fund Custodial Accounts. Such plans allow Employee Participants to defer Pre-tax dollars to invest for future retirement needs.
All returns are net of any charges by the insurance company.
This amount may be paid on a variable or fixed basis, or a combination of both. Before Tax or Pre-tax Contributions Contributions before Federal income tax are withheld from an Eligible Employee's or Participant's salary or wages. A Calendar Year or Tax Year is January through December. This is not to be confused with the school year or contract year. All wages, salaries or other amounts earned during the Calendar Year by an Employee or Participant for services provided for the Employer, including any salary reduction amounts made pursuant to a Salary Reduction Agreement and Pre-tax contributions to a state sponsored retirement plan.