Question
How to create a Section 125 Cafeteria Plan?
Our newly formed S-Corp would like to establish a Section 125 Cafeteria Plan. We only have 1 full-time employee who will be taking advantage of the plan. My question is how to we document we have this plan in place. I have included the following verbiage (below) in our corporate minutes, will this suffice? SECTION 125 CAFETERIA PLAN The chairperson recommended that the corporation adopt a Section 125 Cafeteria Plan, upon motion duly made and seconded, it was RESOLVED, it is hereby agreed to by the Directors that the company will have a Section 125 Cafeteria Plan for all full-time employees in accordance with IRS regulations effective September 1, 2009. We're in California and the employee is not an Officer. According to the IRS there is no filing requirement (Form 5500 or Schedule F) for a cafeteria plan. That's what's making it unclear on how to establish such a plan. Our insurance agent is the one who said as long as we note it in our corporate minutes showing we have such a plan would suffice.
1 month ago - 3 answers
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Chosen by Asker
What state does your operate in? I have a specialist that can set that up for you. I don't think they charge anything either.
by Kahmer
1 month ago
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Other Answers
*snort* First, who is the employee? They can't be an officer or 2%+ shareholder of the S corp. Second, putting verbage in the minutes is *not* a written plan. Third you may have to file a tax form 5500 each year (though possibly not if all you are doing is paying for healthcare).
by the tax lady- 1 month ago
Do not rely on an insurance salesperson for tax advice. Have your accountant take care of the paperwork for this. Accountants know how to document things to the IRS's satisfaction.
by StephenWeinstein- 1 month ago