How a POP Cafeteria Plan Works
Click "here" to return to the "Cafeteria Plans" Page.
By electing to redirect a portion of your salary to your Company's Cafeteria Plan, you
essentially "bank" your money in a tax-free account. The money is used to pay for all those
insurance premiums that formerly ate away at your take-home pay.
You still receive excellent fringe benefits -- but you are also saving tax dollars because you are
paying for the benefits through the CAFETERIA PLAN. Here is how one employee increased
their monthly take-home pay by $25 through participation in a CAFETERIA PLAN.
Without a With a
Cafeteria Plan Cafeteria Plan
Gross Pay $1,000.00 $1,000.00
-100.00
Taxable Gross $1,000.00 $ 900.00
Estimated Taxes @ 25% -250.00 -225.00
Spendable Income $ 750.00 $ 675.00
Insurance Premium -100.00 0
Net Take Home Pay $ 650.00 $ 675.00
Increase in take-home pay of $25.00
Depending on your marital status, deductions, and income, you could save between $22 and $45
on every $100 you spend on benefits. And remember -- these are expenses you will be paying
throughout the year. Why not pay them with tax-free dollars?
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