A Section 125 POP Plan is an efficient way of saving on tax expenses for both employers and employees. It doesn't matter if there is only one or thousands of employees, Premium Only Plans can help businesses realize significant tax savings without reducing employee pay and benefits.
Unfortunately however, not many businesses are putting Section 125 POP plans to use. Why is that? It's difficult to understand why this tax saving scheme thought of by the government which is supposed to increase the employees' net pay and at the same time shore up more funds for a company's operational needs would have few takers.
The truth is, not too many people are familiar with Section 125 plans and the many benefits that can be had from implementing one. Aside from the limited information on POP plans, there's also the notion that these plans are hard to implement and even harder to remain in compliance with.
On the contrary though, employers can actually sponsor a Section 125 POP with little trouble. Nowadays, there are many service providers which can help with Section 125 POP Plan documents, both in starting a plan and staying in compliance, for an affordable fee.
If you are considering implanting a POP Section 125 plan in your organization, these are the basic documents and administrative procedures you need to comply with:
1. The POP Plan Document.
No Section 125 POP Plan can be implemented without this document. It details all the key points of the plan such as plan coverage, plan year covered, eligibility, and election procedures.
2. Summary Plan Description or SPD.
Another basic requirement of the law is that all plan participants and dependents should be aware of all details regarding their POP plan coverage. Such important information, like the claim filing procedures and the details on plan administration, are outlined in the SPD. The IRS code further requires that the SPD should be distributed to the participants and their beneficiaries within 90 days of participation and 120 days after being deemed eligible, respectively.
These procedures are in accordance with Section 104b of the Employee Retirement Income Securities Act of 1974 or ERISA, the regulation designed mainly to safeguard the rights of participants and dependents of employee benefit plans.
3. Compliance.
Updating the Document whenever there are legislative changes, or changes in the information originally given is also a must. For instance, if the company transfers to a new location, then a corresponding update in the Section 125 POP Plan document must be made to stay in compliance. Failure to meet the needed compliance requirements may result in the employer losing its tax-favored status.
Unfortunately however, not many businesses are putting Section 125 POP plans to use. Why is that? It's difficult to understand why this tax saving scheme thought of by the government which is supposed to increase the employees' net pay and at the same time shore up more funds for a company's operational needs would have few takers.
The truth is, not too many people are familiar with Section 125 plans and the many benefits that can be had from implementing one. Aside from the limited information on POP plans, there's also the notion that these plans are hard to implement and even harder to remain in compliance with.
On the contrary though, employers can actually sponsor a Section 125 POP with little trouble. Nowadays, there are many service providers which can help with Section 125 POP Plan documents, both in starting a plan and staying in compliance, for an affordable fee.
If you are considering implanting a POP Section 125 plan in your organization, these are the basic documents and administrative procedures you need to comply with:
1. The POP Plan Document.
No Section 125 POP Plan can be implemented without this document. It details all the key points of the plan such as plan coverage, plan year covered, eligibility, and election procedures.
2. Summary Plan Description or SPD.
Another basic requirement of the law is that all plan participants and dependents should be aware of all details regarding their POP plan coverage. Such important information, like the claim filing procedures and the details on plan administration, are outlined in the SPD. The IRS code further requires that the SPD should be distributed to the participants and their beneficiaries within 90 days of participation and 120 days after being deemed eligible, respectively.
These procedures are in accordance with Section 104b of the Employee Retirement Income Securities Act of 1974 or ERISA, the regulation designed mainly to safeguard the rights of participants and dependents of employee benefit plans.
3. Compliance.
Updating the Document whenever there are legislative changes, or changes in the information originally given is also a must. For instance, if the company transfers to a new location, then a corresponding update in the Section 125 POP Plan document must be made to stay in compliance. Failure to meet the needed compliance requirements may result in the employer losing its tax-favored status.
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