Reso 2009-1390 - Laserfiche WebLink

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Glossarv: Section 125 Cafeteria Plan: Defined by the Internal Revenue Code as a plan that permits the participant to choose between two or more benefits consisting of cash and qualified benefits. Dependent Care Spendinq Account: Employer-sponsored flexible benefit plan feature that permits employees to use pretax (tax-free) dollars from their paychecks to pay the cost of care for children or elderly dependents up to a certain legislated limit and within very specific guidelines. Flexible Benefit Plan: A benefit program under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including cash, and nontaxable health and welfare benefits such as life and health insurance, vacation pay, retirement plans and child care. Although a common core of benefits may be required, the employee can determine how his or her remaining benefit dollars are to be allocated for each type of benefit from the total amount promised by the employer. Sometimes employee contributions may be made for additional coverage. Flexible Spendinq Accounts (FSAs): Many flexible benefit programs include flexible spending accounts, which give employees a choice between taxable cash and nontaxable compensation in the form of payment or reimbursement of eligible, tax-favored welfare benefits. FSAs can be funded through salary reduction, employer contributions or a combination of both. Employees can purchase additional benefits, pay health insurance deductibles and copayments, or pay for child care benefits with the money in their FSAs. Section 125 Plan: A plan in compliance with Section 125 of the Internal Revenue Code, which protects an employee from constructive receipt of the cash he or she has as a choice of benefits under a cafeteria plan. Use-lt-or-Lose-lt Rule: A rule forbidding cafeteria plans to let participants defer receipt and taxation of compensation from year to year by carrying over unused pretax contributions or plan benefits. 19