Provide benefits for your company and your employees while saving taxes by establishing your own Cafeteria Plan today!
How your employees can save money
The portion of salary which an employee directs to a Cafeteria Plan is not taxed.
On the amount the employee redirects into a Cafeteria Plan, he or she will not pay:
- Federal Income Tax.
- State and Local taxes (where applicable).
- Social Security tax (assuming the employee’s salary is below the maximum Social Security wage base).
How can an employee determine what his/her savings will be?
Your employees’ savings will depend on the amount directed to the Cafeteria Plan and the employees tax rate. The following example will help illustrate the savings.
Notice: The maximum amount that can be directed to the FSA (unreimbursed medical portion) is $2,750 per employee per year effective January 1, 2020.
What happens to the money that the employee puts into an FSA?
The money is maintained by the company until expenses are incurred by the employee. After an expense is incurred, the employee will request reimbursement from the company.
Is it possible for the employee to forfeit or lose a contribution?
You must spend all your FSA funds by the end of the Plan Year. However, your employer can adopt the $500 Rollover option so that you don’t lose up to $500 if you don’t spend it by the end of the Plan Year. Alternatively, your employer can adopt the 2 1/2 Month Extension, so that you have an additional 2 1/2 months after the end of the Plan Year to use the remainder of your FSA funds. Either option enables you to use all your funds during the extension period. Any funds left unspent after the end of any extension period reverts to the employer.
Who can sponsor a Cafeteria Plan?
Regular Corporations, Partnerships, “S” Corporations, Limited Liability Companies (LLC’s), Professional Limited Liability Company’s (PLLC’s), Sole Proprietors, Professional Corporations (PA’s), and Not-For-Profits can all save money on taxes by establishing an OMNI Cafeteria Plan.
While regulations prohibit a Sole Proprietor, Partner, members of an LLC (in most cases), or individuals owning more than 2% of an “S” corporation from participating in the FSA Plan, they may still sponsor a plan and benefit from the savings on the payroll taxes.
Contact OMNI Group, LLC today, to find out more about how your company and your employees can lower your tax liability while still offering significant benefits.
To set up your own Cafeteria Plan, review the page entitled “Important Information,” complete the enclosed Application and mail or fax to OMNI Group. One of our specialists will contact you.
There are fees for establishing and administering your Cafeteria Plan which fall into three categories: Set-up Fee, Monthly Administration Charge per Applicant and an Annual Renewal Fee. See the enclosed fee schedule for more information.