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Section 1 <br />EXECUTIVE SUHHASY <br />Increased Income for Participants <br />Flexible spending accounts are employee benefit programs <br />which permit employees to pay certain out-of-pocket expenses- <br />-such as medical and dental premiums, health care expenses <br />(including both medical and dental), and dependent day care <br />expenses—with pre-tax dollars. This results in increased <br />spendable Income for participants. <br />Savings to the Plan Sponsor <br />Pre-tax dollars used to pay qualified expenses are not <br />subject to FICA (social security) taxes—for either the employee <br />or the employer. Depending upon the provisions of the employer's <br />medical and dental plans, the timing of reimbursements and the <br />degree of utilization of the accounts, these tax savings may <br />offset the cost of the plan to the employer. <br />IRS Regulations <br />The primary IRS requirements are: <br />1. The plan must have a formal plan document.and employees <br />must receive a summary plan description of benefits. <br />2. The plan must meet the nondiscrimination requirements of <br />Section 125 and 129. See "Nondiscrimination <br />Requirements".