Many employers find that they can no longer compete for the best employees with salaries alone.
These employers are turning to innovative flexible benefit packages to attract and retain desirable employees. Providing employees with the means to choose benefits that best fit their needs can be an important retention tool. Flexible benefit arrangements allow employers to control costs while still offering attractive benefit packages. However, special rules apply under Section 125 of the Internal Revenue Code, when the employee can choose between tax-exempt benefits and cash or taxable benefits. Under Code Section 125, a flexible benefit program is identified, legally, as a cafeteria plan.