Section 125 Program:
The Ultimate "Win-Win" Benefit Strategy
At Legacy Group, we specialize in helping businesses unlock hidden savings. A Section 125 Cafeteria Plan is a powerful, IRS-approved program that allows your employees to get their benefits using pre-tax dollars.
The result? Your employees receive more pay, get prescriptions and medical supplies included in the plan, and we add $1,000 to $2,500 a year to their retirement plan! On top of that your company pays considerably less in payroll taxes.
How It Works
Normally, when an employee pays for health insurance or daycare, they do it with "post-tax" money—income that has already been hit by federal, state, and FICA taxes.
With a Section 125 Plan, those costs are deducted before taxes are calculated. This lowers the employee's taxable income, effectively giving them a "raise" without costing your company an extra cent in wages.
Benefits for the Employer
Reduced Payroll Taxes: Because employee taxable income is lower, your company saves the 7.65% FICA match (Social Security and Medicare) on every dollar ran through our plan.
Neutralize Benefit Costs: The tax savings cover the cost of administering our plan, making it a self-funding benefit.
Recruitment & Retention: Offer a more competitive, "big company" feel to your benefits package that helps you attract and keep top talent with your company.
Benefits for the Employee
Increased Take-Home Pay: By lowering their taxable income, employees save roughly 25% to 40% (depending on their tax bracket) on the cost of their premiums and medical expenses.
Customizable "Cafeteria" Style: Employees can choose the benefits that fit their life, such as:
Health, Dental, and Vision premiums.
Flexible Spending Accounts (FSA) for out-of-pocket medical costs.
Dependent Care (Daycare/Elder care) assistance.
Health Savings Accounts (HSA).
Why Choose Legacy Group for Your Section 125 Plan?
The IRS requires a formal, written Plan Document and regular compliance testing to maintain these tax advantages. We handle the heavy lifting for you:
Plan Design & Setup: We customize the plan to fit your business size and needs.
Compliance Management: We ensure your plan stays up-to-date with current IRS regulations. Compliance can be hard, but with us we keep your employees in compliance so they don’t lose the benefits of using this program, and your company keeps the tax savings
Employee Education: We help your team understand their new savings so they value the benefit you're providing.
The Bottom Line:
If you provide health insurance or other benefits and don't have a Section 125 Plan, you are likely overpaying on taxes every single month.
Ready to start saving?
Contact us today for a free analysis of how much a Section 125 Plan could save your business this year.
Legacy Group Consulting
Strategic tax incentive consulting for businesses that build, develop, and invest. We specialize in identifying federal and state tax credits that strengthen your financial position - partnering with your CPA to deliver results you can trust.
Core Focus Areas: 45L Energy Efficient Home Credit
179D Commercial Building Deduction
Cost Segregation
R&D Tax Credits
ERTC
Ready to explore your tax incentive opportunities?
There are significant savings available - many of which go unclaimed each year. Reach out today for a complimentary assessment and discover what you qualify for.