 Benefits of a Premium Only Plan Both the employee and the employer benefit from a Premium Only Plan or POP. The employer has reduced payroll taxes because the employee's contribution are not considered part of their taxable income. On the other hand, employees receive a reduction in their taxable income, thus decreasing the amount paid by them. Note: The IRS requires a formal Plan Document for all Section 125 Cafeteria Plans Nondiscrimination Testing If you have adoped a Premium Only Plan: - You are required by law to perform an Annual Nondiscrimination Test on your POP (as well as throughout the Plan Year if there are changes in enrollment).
- POP's cannot discriminate in favor of Highly Compensated and/or Key Employees.
- You must know which employees are Highly Compensated and/or Key Employees for purposes of the POP's Eligibility Test and the Contributions and Benefits Test.
Your plan coud be ineligible if the Nondiscrimination Test is performed improperly! Benefit Advantage will perform your annual Nondiscrimination Test for a fee. The Premium Only Plan Kit Includes:
- The "How To" Administrative Guide
- Adoption Agreement
- Announcement Letter
- Benefit Election Form
- Benefit Election Change Request Form
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- Cafeteria Plan Implementation
- Change of Status Matrix
- Plan Document
- Plan Information Summary
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For a Premium Only Plan Request Form Note: If the employer is a Sub. Chapter S corporation, any 2% or greater owner of the corporation (or their dependent(s) are not eligible to participate in any form of the Section 125 Cafeteria Plan. |
