Cafeteria plans save employer and employee costs. Jan 1991 Cafeteria plans save employer and employee costs. Cafeteria plans allow employees to select their own benefits, the choices of which must contain one taxable and one non-taxable benefit.
Employees make a selection at the beginning of the year.
Cafeteria plans are required to be in writing and must contain specific descriptions of each benefit, eligibility rules for participants, procedures to be followed after making a selection, and the maximum amount of employer contributions made to each employee under the plan. Cafeteria plans are benefit plans that allow a company's employees to select their choice of benefits. The list of choices must contain at least one taxable and one non-taxable benefit. A taxable benefit would be to continue to receive regular compensation through payroll. The nontaxable benefit could include group-term life insurance, accident and health insurance, group legal services coverage, and dependent care assistance coverage.