Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other. You can now withhold taxes on $950 rather than $1,000. Section 125(d)(1)(B); see also Prop. A Section 125 (or cafeteria) plan is an employer-sponsored benefit plan that gives employees access to certain taxable and nontaxable pretax benefits. Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of the Form W-2 PDF, with Code DD to identify the amount. It is also known as a cafeteria plan. It shows my gross pay, less other cafe 125 and then my reported W-2 wages. As a result of this, these amounts get subtracted and arent part of your Box 1 taxable wages. See What Is Cafe 125 on a W-2 Tax Form? for a more detailed description of this entry. This amount represents tax free benefits provided by your employer. Section 125 Cafeteria Plans: Everything to Know in 2023. Section 125 Plan Defined All employees can take advantage of the Section 125 plans, including their spouses and other dependents. There is no Form W-2 or 1099 reporting for IRC Section 139 payments. Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. Box 12 — Various Form W-2 codes on. When you enter your W-2 into TurboTax, dont enter the code W or its corresponding dollar amount at all. An employee who takes the benefit generally enjoys two tax advantages: A cafeteria plans employee contributions are pre-tax. What is section 125 in box 14 on my w2?. Section 125: What it is and What It Means to Employers>Section 125: What it is and What It Means to Employers. Box 12 of my W-2 (marked W) shows the total employer contributions to our HSA. The amount has already reduced your W2,. Sec 125 represents the pretax health insurance costs you paid. S125 refers to a Section 125 plan which describes payroll deductions for some employee benefit. Any amount in this W-2 box over $5,000 is also included in Box 1. Compensation doesnt include amounts deferred under a section 125 cafeteria plan. What is a section 125 plan on w2? Under a cafeteria, or Section 125, plan, you pay for your employer-sponsored benefits with pretax money. Where does Section 125 go on w2?. Related to Deemed 125 Compensation. **Say Thanks by clicking the thumb icon in a post **Mark the post that answers your question by clicking on Mark as Best Answer. Complete Form 2441, Child and Dependent Care Expenses, to compute any taxable and nontaxable amounts. It shows my gross pay, less other cafe 125 and then my reported W-2 wages. The answer is Yes - t he CAF125 is a deferment (pre-tax) of the employees wage and should already be subtracted from the total amount reported in Box 1 of the W-2. HERE is a picture of what it says This answer may not be complete but: Cafeteria (Section 125) plans allow certain expenses you incur during the year to be taken out of your paycheck pre-tax. The Dependent Care deduction should be shown in box 10 of the W2 form from your employer. What is a section 125 plan designed to do? According to the IRS, a section 125 plan provides employees with an opportunity to receive certain benefits on a pre-tax basis. These withholdings constitute the difference. What does CAFE mean on a W-2?. A Section 125 Plan is a benefits plan authorized by the IRS Code that bears its name. SEC 125 is your employer’s benefit plan. W2 box 14 CAF125 category. Box 11 — This section shows the total amount distributed to you from your employer’s non-qualified (taxable) deferred compensation plan. Employees have more money for out-of-pocket expenses. Simple cafeteria plans, Premium-only plans (POPs), Full flex plans, and Flexible spending arrangements (FSAs) are the four types of Cafeteria plans. Section 125 is a written plan that lets employees choose between two or more benefits, including qualified benefits (e. Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between. Sec 125 - If enrolled in the Premium Option Plan or Unreimbursed Medical FSA, this amount is representative of your Health and/or Dental deductions along with any FSA deductions withheld from your paycheck(s). The plan can be made available to. Box 8 — Shows tip income allocated to you by your employer. For a business owner, a section 125 plan helps to reduce payroll and tax liabilities, including FICA and FUTA. Section 125 Cafeteria Plan / ADP Skip to main content Start Quote What We Offer Overview What We Offer. Section 125 plans are available to all employees, as well as their spouses and dependents. Solved: What does S125 mean on w. What does SEC125 in box 14 of the W2 mean?. This, in turn, reduces the amount the company pays in payroll taxes. Any amount in this W-2 box over $5,000 is also included in Box 1. SECTION 125 is your employer’s benefit plan. Section 125 is the section of the IRS tax code where the items that can be deducted from employee pay on a pre-tax basis are defined. A town has a cafeteria plan (section 125 plan), which offers dependent care assistance. What does CAF125 shown in Box 14 mean and is it taxable?. If it is an employee benefit that has already been removed from Wages in Box 1, then, choose a category of Other. In general, the amount reported should include. These are known as voluntary payroll deductions and they can be withheld on a pretax basis (if allowed under Section 125 of the Internal Revenue Code) or post-tax basis. What is Section 125 on my w2?. Section 125 Dependent Care Guidelines. In the context of Section 125, “pre-tax” means that a deduction is exempt from Federal Income Tax Withholding, Social Security and Medicare Taxes. The benefits received by an employee exceed $5,000. Employees, their spouses, and their dependents can all benefit from section 125 plans. Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits. SECTION 125 is your employers benefit plan. A Code S125 refers to a Section 125 plan which describes payroll deductions for an employee benefit. Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of the Form W-2 PDF, with. Because voluntary deductions are optional, you should make sure your employees are fully aware them. These withholdings constitute the difference between gross pay and net pay and may include: Income tax. These are known as voluntary payroll deductions and they can be withheld on a pretax basis (if allowed under Section 125 of the Internal Revenue Code) or post-tax basis. Tax Information Center IRS Forms What do the W-2 boxes and W-2 form codes mean? Millions of American taxpayers receive a W-2 form from the Internal Revenue Service,. This answer may not be complete but: Cafeteria (Section 125) plans allow certain expenses you incur during the year to be taken out of your paycheck pre-tax. W2 line 14 shows a amount for Sec 125 ( its large) do i add. The amount in the IRC 125 Box is subject to New York State and City taxes. Learn how to get started with a cafeteria plan that may help you attract talent. Its not showing my pretax employee contributions to this … read more. SEC 125 is your employers benefit plan. This amount has already been excluded from your wages for Boxes 1, 3, and 5. Your last pay stub for the year includes pretax deductions in your gross wages. **Say Thanks by clicking the thumb icon in a post. Any amount in this W-2 box over $5,000 is also included in Box 1. Section 125: What it is and What It Means to Employers. What you will see on your W-2 is a reduction in your gross wages because the cafeteria plan lowered your salary. Your employer deducts your payments from your wages before withholding certain taxes. It might use the code Section 125 or Café 125, and then state your pretax. Section 125 Dependent Care Guidelines I RS form 2441 should be filed with your tax form 1040 when dependent care has been deducted from your pay. In the context of Section 125, pre-tax means that a deduction is exempt from Federal Income Tax Withholding, Social Security and Medicare Taxes. Compensation doesnt include amounts deferred under a section 125 cafeteria plan. A § 125 cafeteria plan may offer only qualified benefits. Section 125 Cafeteria Plan. Quick links Who is eligible for Section 125 Plans? What are the common types of Section 125 Plans?. Section 125 Plan Defined All employees can take advantage of the Section 125 plans, including their spouses and other dependents. It is also known as a cafeteria plan. These benefits can include medical insurance, life insurance, adoption assistance, assistance with care for dependent elderly relatives, extra paid vacation days and similar. Adding in Box 14 doesnt go anywhere or do anything. A town has a cafeteria plan (section 125 plan), which offers dependent care assistance. com%2farticles%2fpersonal-finance%2f080816%2fsection-125-plan-cafeteria-plan-how-does-it-work. The Payroll Department will not re-issue or mail replacement W-2s. The amount has already reduced your W2, Box 1 wages, so you dont deduct it again on your federal return. Section 125 is a written plan that lets employees choose between two or more benefits, including qualified benefits (e. The contributions you make as an. If it is an employee benefit that has already been removed from. The answer is Yes - t he CAF125 is a deferment (pre-tax) of the employees wage and should already be subtracted from the total amount reported in Box 1 of the W. This amount will never be more than the maximum FICA taxable wage base ($118,500 for 2016 and $126,000 for 2017). Section 125(i) provides that a health FSA is not treated as a qualified benefit unless the cafeteria plan “provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement. Employees receive benefits as pre-tax deductions. In box 14 it has “caf125” In HR block do I put it as “sec125” “Irc125S” or read more. Also, this has been excluded from Box 16 if “PA” is in Box 15. Fringe Benefits, Rules for 2% S Corp Shareholders. ” Because employees make salary reduction contribution elections for health FSAs only. Section 125 plans offer employees the option of receiving cash payments or employee benefits. Section 125 is a written plan that lets employees choose between two or more benefits, including qualified benefits (e. How is this benefit reported on Form W-2? An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Benefits provided by plans covered under section 125 include: adoption assistance dependent care assistance accident and health insurance group term life insurance policies dependent care assistance They are called cafeteria plans because employees are given a list of benefits to choose from, similar to a cafeteria-style menu. This amount isn’t included in W-2 boxes 1, 3, 5, or 7. SEC 125 is your employers benefit plan. This may sound like it has something to do with where you go on your lunch break, but there is a more reasonable explanation. A Section 125 Plan is a benefits plan authorized by the IRS Code that bears its name. If an employee makes the election before the start of the plan year, and other § 125 requirements are satisfied, the employee’s election of one or more qualified. The CAF125 entry in Box 14 does not change the way the return is prepared and/or filed. Depending on what these items are for, they perhaps should have been reported differently and in box 12. A Section 125 plan is an employer-provided plan named after a section of the IRS code that allows employees to choose between two or more benefits (hence the nickname “cafeteria plan”), such as health insurance, dental insurance, disability income insurance, life insurance, dependent child care, etc. This can be downloaded and printed out. IMPORTANT INFORMATION ABOUT YOUR 2020 W. Your employer doesn’t include your pretax payments in your taxable wages on your annual W-2. However, only your employer knows what these items are referring to. The reduction in earnings shows on your W-2 but not on your pay statement. As 2020 draws to a close, employers should be reviewing whether they have properly included common fringe benefits in their employee’s and (if applicable) 2% S corporation shareholders’ taxable wages. It might use the code “Section 125” or “Café 125,” and then state your pretax. I just noticed it on my W-2 and do not remember this from last year. A Section 125 (or cafeteria) plan is an employer-sponsored benefit plan that gives employees access to certain taxable and nontaxable pretax benefits. Section 125 Cafeteria Plan / ADP Skip to main content Start Quote What We Offer Overview What We Offer. If your employer refuses to correct your W-2, then I suggest you take the following steps: 1. The amount in the IRC125 box is treated on a pre-tax basis for federal income purposes. There is no reporting on the Form W-3 of the total of these amounts for all the employers employees. S125 refers to a Section 125 plan which describes payroll deductions for some employee benefit. SECTION 125 is your employers benefit plan. It reduces your taxable wages (Box 1) and social security and Medicare wages (Boxes 3 and 5). com/_ylt=AwrJ_xWg8FVkQwEd5j9XNyoA;_ylu=Y29sbwNiZjEEcG9zAzMEdnRpZAMEc2VjA3Ny/RV=2/RE=1683382561/RO=10/RU=https%3a%2f%2fwww. Answer: W-2s were mailed out and a courtesy copy has been loaded onto each employee’s MSDWT payroll portal account under Documents—Federal Form W-2. A Section 125 (or cafeteria) plan is offered by employers that provide employees with taxable and nontaxable benefits before tax. Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies. No, the amount listed as Cafe 125 on your Form W-2 was already excluded from your gross income in box 1. A Section 125 plan enables employers to reduce employees’ gross income by allowing contributions to certain benefits to be pre-tax. Solved: W2 box 14 CAF125 category. The only important Box 14 Sec 125/ IRC 125 dropdown is if you work for the government of New York City. The fact that contributions to an HSA can be part of a Section 125 plan does not justify using code W. For purposes of applying the 100-employee limitation, and in determining whether an employee had $5,000 in compensation for any two preceding years, an employees compensation also includes the employees elective deferrals under a 401 (k), SARSEP or 403 (b) plan. Section 125 Dependent Care Guidelines. The W-2 form is a United States federal wage and tax statement that an employer must give to each employee and also send to the Social Security Administration (SSA) every year. The fact that contributions to an HSA can be part of a Section 125 plan does not justify using code W. Box 11 — This section shows the total amount distributed to you from your employer’s non-qualified (taxable) deferred compensation plan. I just noticed it on my W-2 and do not remember this from last year. Section 125 is the section of the IRS tax code where the items that can be deducted from employee pay on a pre-tax basis are defined. What does less than Cafe 125 mean on w2? These cafeteria plans allow employees to set aside pre-tax income for certain employer-offered benefits. What is a section 125 plan on w2? Under a cafeteria, or Section 125, plan, you pay for your employer-sponsored benefits with pretax money. All Section 125 benefits are not subject to the Federal Insurance Contributions Act, Federal Unemployment Trust Fund, Medicare or income tax withholding, with the exception of adoption assistance, which is subject to all of these taxes other than income tax withholding. Tax advisor and Enrolled A Bachelors Degree. 415 Compensation shall be based on the full. I just noticed it on my W-2 and do not remember this from last year. There is no Form W-2 or 1099 reporting for IRC Section 139 payments. The NYS income tax instructions direct the income tax filer to report wages as they appear on the W-2 in Box 1 then to add back the amount to arrive at New York State/City taxable wages. Also, this has been excluded from Box 16 if “PA”. What is section 125 in box 14 on my w2?. Examples might be FSA or HSA payments or health insurance premiums. What are Payroll Deductions?. A Section 125 Plan is a benefits plan authorized by the IRS Code that bears its name. A section 125 plan is a cost-effective way to sponsor benefits. **Say Thanks by clicking the thumb icon in a post **Mark the post that answers your question by clicking on Mark as Best. com>What is sec125 on W2? – AnswersAll. What Happens if Your Employer Does Not Put Your HSA Savings on Your W2. Deemed 125 Compensation means an amount that is excludable from the gross income of the Employee under Code §106 that is not available to the Employee in cash in lieu of group health coverage under a Code §125 arrangement solely because that Employee is not able to certify that he or she has other health coverage. What does less other cafe mean on my W-2? SECTION 125 is your employer’s benefit plan. Cafe 125 stands for IRS regulation code section 125 regarding tax-free cafeteria employee benefit plans. In the context of Section 125, “pre-tax” means that a deduction. SECTION 125 is your employer’s benefit plan. Section 125 is the section of the IRS tax code where the items that can be deducted from employee pay on a pre-tax basis are defined. Pretax Health = $125. The amount in the IRC125 box is treated on a pre-tax basis for federal income purposes. When you enter your W-2 into TurboTax, dont enter the code W or its corresponding dollar amount at all. This money is taken out of the individuals gross pay and can be used for items such as group health insurance premiums, qualified out-of-pocket medical expenses, and daycare. The total dependent care benefits the employer paid to the employee or incurred on the employee’s behalf (including amounts from a section 125 plan) should. W2 as “less other cafe 125”?>Can I deduct the money listed on my W2 as “less other cafe 125”?. Since funds are placed into this account pre-tax, it reduces the amount of taxable income present on a W-2 later in the year. See What Is Cafe 125 on a W-2 Tax Form? for a more detailed description of this entry. First, subtract the $50 pre-tax withholding from the employee’s gross pay ($1,000): $1,000 – $50 = $950 The employee’s taxable income is $950 for the pay period. 9% premium as a standard payroll deduction. If employee pretax 401 (k) or individual retirement account contribution deductions are included in the cafeteria plan, these are reportable to BWC. The Dependent Care deduction should be shown in box 10 of the W2 form from your employer. Section 125 plan pros and cons. A plan that offers a nonqualified benefit is not a § 125 cafeteria plan. Employer provided dependent care assistance is tax-free only if the following conditions are met: 1. Employees, their spouses, and their dependents can all benefit from section 125 plans. Because the money you funnel from employees’ salaries toward their Section 125 plans isn’t taxed as normal income, they’ll pay less in taxes. A Section 125 plan is an employer-provided plan named after a section of the IRS code that allows employees to choose between two or more benefits (hence the nickname “cafeteria plan”), such as health insurance, dental insurance, disability income insurance, life insurance, dependent child care, etc. Section 125 plans are available to all employees, as well as their spouses and dependents. asp/RK=2/RS=n8FsraZkyOi74kvRPwUx3bFWRTE- referrerpolicy=origin target=_blank>See full list on investopedia. What does less other cafe mean on my W-2? SECTION 125 is your employer’s benefit plan. For every participant of the plan, employers save a considerable. Section 125 Cafeteria Plans: Everything to Know in 2023. A Code S125 refers to a Section 125 plan which describes payroll deductions for an employee benefit. In the federal Income tab, the W2 topic you would enter Sec 125 in the box 14 description and the amount in the box 14 amount box and unless your Box 14. RET probably describes a contribution to a retirement plan. IRS form 2441 should be filed with your tax form 1040 when dependent care has been deducted from your pay. What is 414h in box 14 on W2?. Thus the HSA and health/dental premiums were deducted pretax, but only the HSA items fall in Box 12W. Tax Frequently Asked Questions. The deduction is $50 per payroll, and you pay the employee a gross pay of $1,000 per biweekly pay period. Compensation doesnt include amounts deferred under a section 125 cafeteria plan. Section 125 is the section of the IRS tax code where the items that can be deducted from employee pay on a pre-tax basis are defined. 0 Reply SweetieJean Level 15 June 7, 2019 2:59 PM. Deemed 125 Compensation means an amount that is excludable from the gross income of the Employee under Code §106 that is not available to the Employee in cash in lieu of group health coverage under a Code §125 arrangement solely because that Employee is not able to certify that he or she has other health coverage. 415 Compensation means, with respect to any Participant, such Participants (a) Wages, tips and other compensation on Form W-2, (b) Code §3401(a) wages or (c) 415 safe harbor compensation as elected in the Adoption Agreement for purposes of Compensation (and as defined in Subsections 1. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses. Related to Deemed 125 Compensation. Since funds are placed into this account pre-tax, it reduces the amount of taxable income present on a W-2 later in the year. If this amount isn’t included, or it is incorrect. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses. SEC 125 is your employer’s benefit plan. Employer provided dependent care assistance is tax-free only if the following conditions are met:. Box 5 of the Form W-2 (above) Unlike Social Security wages, there is no cap for wages subject to Medicare taxes. If you have less than 10 employees, you are not required to pay the employer share. A Code S125 refers to a Section 125 plan which describes payroll deductions for an employee benefit. Health savings accounts show up on your Form W-2 in Box 12 using code “W,” which covers all employer contributions to an employee’s HSA. SECTION 125 is your employer’s benefit plan. What is a Section 125 Plan?. What Is Cafe 125 On A W2 Tax Form? (TOP 5 Tips). OVERVIEW You might be confused to see Cafe 125 listed on your W-2 form. Payroll deductions are wages withheld from an employee’s total earnings for the purpose of paying taxes, garnishments and benefits, like health insurance. It is a written plan that allows employees the flexibility to choose compensation in the form of benefits or in cash. S125 refers to a Section 125 plan which describes payroll deductions for some employee benefit. Can I deduct the money listed on my W2 as “less other cafe 125”?. Section 125 Dependent Care Guidelines I RS form 2441 should be filed with your tax form 1040 when dependent care has been deducted from your pay. Reporting on the Form W-2. Employer-paid student loan debt: During 2020, the CARES Act allows employers to pay up to $5,250 of their employees’ student loan debt and not treat the payment as taxable wages. In a section 125 plan or cafeteria plan, employees can pay qualified medical, dental, or dependent-care expenses on a pretax basis, which has the effect of reducing their taxable income as well as their employer’s Social Security (FICA) liability, federal income and unemployment taxes, and state unemployment taxes …. It stands for Cafeteria 125 Plan. 70 Taxable OASDI/Social Security & Medicare Wages. $11,216 Take-Home Pay $43,784 Show Details Exploring W-2 Reconciliation Since the taxable wages boxes of your W-2 don’t include your Section 125 contributions,. What does less other cafe mean on my W-2? SECTION 125 is your employer’s benefit plan. 1 Reply ChristinaS New Member June 6, 2019 2:23 AM Sec 125 represents the pretax health insurance costs you paid. SEC 125 is your employer’s benefit plan. What are Section 125 benefits?. What does less than Cafe 125 mean on w2? These cafeteria plans allow employees to set aside pre-tax income for certain employer-offered benefits. In a section 125 plan or cafeteria plan, employees can pay qualified medical, dental, or dependent-care expenses on a pretax basis, which has the effect of reducing. Box 12 of my W-2 (marked W) shows the total employer contributions. Deemed 125 Compensation Definition. S125 refers to a Section 125 plan which describes payroll deductions for some employee benefit. Since the taxable wages boxes of your W-2 dont include your Section 125 contributions, to get your real gross wages you should add the amount in box 14 to the amount in the respective taxable wages box. Subscribe now. What Is Cafe 125 on a W2 Tax Form?. Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies. 9% Additional Medicare tax on any Medicare wages and tips above $200,000 ($250,000 for married filing joint) Box 7 — Shows any social security tip income you reported to your employer. 02-08-2021 12:14 PM. Section 125 is a written plan that lets employees choose between two or more benefits, including qualified benefits (e. In a section 125 plan or cafeteria plan, employees can pay qualified medical, dental, or dependent-care expenses on a pretax basis, which has the effect of reducing their taxable income as well as their employer’s Social Security (FICA) liability, federal income and unemployment taxes, and state unemployment taxes …. A series of rulings by the IRS established that only amounts that the governmental employer pays (including certain amounts withheld or otherwise offset from the employees salary) are considered employer contributions, and are therefore excludable from gross income. A Code S125 refers to a Section 125 plan which describes payroll deductions for an employee benefit. Doctoral Degree. It is also known as a “cafeteria plan”. FAQs for government entities regarding Cafeteria Plans. Summary. Since the cafeteria plans lower the employees’ salaries, they will see a reduction in their gross wages on their W-2 forms. My wife received this W2 she worked in NY before we were married. Section 125 on my w2? – AnswersAll. States may treat it differently. SEC 125 is your employers benefit plan. Accordingly, a cafeteria plan that fails to comply with § 125(i) for plan years beginning after December 31, 2012 is not a § 125 cafeteria plan and the. A section 125 plan is a cost-effective way to sponsor benefits. SECTION 125 is your employers benefit plan. Cafe 125 stands for IRS regulation code section 125 regarding tax-free cafeteria employee benefit plans. It is noting that your Box 1 wages were decreased for the pre-tax portion of your wages used to pay for Sec 125 cafeteria type benefits. If you have 10 or more employees, you may deduct up to 50% of the 0. The reduction in year-to-date earnings shows in your W-2, not in your pay statement. This amount will never be more than the maximum FICA taxable wage base ($118,500 for 2016 and $126,000 for 2017). This answer may not be complete but: Cafeteria (Section 125) plans allow certain expenses you incur during the year to be taken out of your paycheck pre-tax. The fact that contributions to an HSA can be part of a Section 125 plan does not justify using code W. The real beauty of a Section 125 Plan is how it provides value for both the employees and the company. Section 125 Dependent Care Guidelines. The real beauty of a Section 125 Plan is how it provides value for both the employees and the company. What Is Less Sec 125 On W2This is especially true for 2020 since the CARES Act made a number of changes to the rules relating to traditional fringe benefits. The Pros and Cons of a Section 125 Plan. A Section 125 (or cafeteria) plan is offered by employers that provide employees with taxable and nontaxable benefits before tax. The answer is Yes - t he CAF125 is a deferment (pre-tax) of the employees wage and should already be subtracted from the total amount reported in Box 1 of the W-2. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses. Because the rate has already been set, this formula is used to calculate premiums:. Here are some of the benefits of Section 125 plans: Employees pay less in taxes. If your employer refuses to correct your W-2, then I suggest you take the following steps: 1. Your employer may report your cafeteria plan deductions in Box 14, which is labeled Other. My wife received this W2 she worked in NY before we were. Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. Reduction of employer payroll and tax liabilities. Solved: What is SEC125 on W2. A § 125 cafeteria plan is a written plan that allows employees to elect between permitted taxable benefits (such as cash) and certain qualified benefits. About the Section 125 (or Cafeteria) Plan. Do I have to report the pre. Sec. Sec 125 - If enrolled in the Premium Option Plan or Unreimbursed Medical FSA, this amount is representative of your Health and/or Dental deductions along with any FSA deductions withheld from your paycheck(s). Sec 125 - If enrolled in the Premium Option Plan or Unreimbursed Medical FSA, this amount is representative of your Health and/or Dental deductions along with any FSA deductions withheld from your paycheck(s). Section 125 Cafeteria Plan / ADP Skip. Section 125(a), (d)(1). You might be confused to see Cafe 125 listed on your W-2 form. A series of rulings by the IRS established that only amounts that the governmental employer pays (including certain amounts withheld or otherwise offset from the employees salary) are considered employer contributions, and are therefore excludable from gross income. A section 125 plan is a cost-effective way to sponsor benefits. All Section 125 benefits are not subject to the Federal Insurance Contributions Act, Federal Unemployment Trust Fund, Medicare or income tax withholding, with the exception of adoption assistance, which is subject to all of these taxes other than income tax withholding. Gross hourly wages and gross salaries less most qualifying deductions for Section 125 cafeteria plan benefits, (usually Medicare wages*). Box 12 — Various Form W-2 codes on. What Is a Section 125 Plan?. A Code S125 refers to a Section 125 plan which describes payroll deductions for an employee benefit. Defined Contribution Plan Auditor>Gross Wage Calculation. What you will see on your W-2 is a reduction in your gross wages because the cafeteria plan lowered your salary. HERE is a picture of what it says This answer may not be complete but: Cafeteria (Section 125) plans allow certain expenses you incur during the year to be taken out of your paycheck pre-tax. A town has a cafeteria plan (section 125 plan), which offers dependent care assistance.