Section 125 Definition
A section of the Internal Revenue Code that allows an employer to offer benefits to employees on a pre-tax basis.
Section 125 Extended Definition
Also known as a cafeteria plan or flexible spending plan, a Section 125 plan is a benefits program offered by employers to give employees the option to pay certain expenses from their paychecks prior to the deduction of taxes.
Employers withhold a percentage of the pre-tax earnings of employees participating in the program and allocate it to selected expenses.
Section 125 Plans: An Overview for Employers
Last Updated By
Rachel Blakely-Gray | May 01, 2023