The Power of Section 125 Pre-Tax Plans for Employers and Employees

The Power of Section 125 Pre-Tax Plans for Employers and Employees

July 10, 20251 min read

Section 125 pre-tax plans are powerful tools that help employers and employees save money on healthcare expenses. These plans allow employees to pay for eligible benefits with pre-tax dollars, lowering taxable income and reducing overall tax liabilities for the organization.


What is a Section 125 Plan?

Also known as a cafeteria plan, Section 125 lets employees choose among different benefits—like health insurance, flexible spending accounts, and wellness programs—funded pre-tax. The Capstone Plus program uses this structure to maximize savings for employers and employees alike.


Employer Advantages

  • Reduced payroll taxes: Lower taxable payroll means less employer tax liability.

  • Attract and retain talent: Offering pre-tax benefits increases the value of compensation packages.

  • Compliance and audit protection: Programs like Capstone Plus ensure IRS and Department of Labor compliance with full audit protection.


Employee Benefits

Employees gain access to valuable health and wellness services without additional out-of-pocket costs. Using pre-tax dollars also means more take-home pay and financial relief.


Conclusion

Section 125 pre-tax plans are win-win solutions for cost savings and employee satisfaction. Partner with Earnest Banks to implement a compliant and effective program tailored to your organization.

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