Cafeteria Plan

Cafeteria Plan

Cafeteria plans are defined under Section 125 of the Internal Revenue Code as plans maintained by an employer that allow each participant to select among cash and one or more qualified non-taxable benefits. This is the technical definition, but in practice a cafeteria plan (sometimes called a flexible benefit plan) is a benefit plan that allows an employee to have some choice in designing his or her own benefit package by selecting different types and/or levels of benefits that are funded with nontaxable employer dollars.

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