A Cafeteria Plan allows your employees to pay for certain benefits. on a pre-tax basis. In other words, they do not pay Federal, State, FICA, or local taxes on benefits they choose to pay for on a salary reduction basis. In most cases, these savings range from 23% to 44%. Think of it, you are giving your employees a pay raise at little or no cost. The benefits they may choose to pay for on a pre-tax basis include certain insurance premiums, child/adult day care expenses, and out-of-pocket health care expenses.
 
While your employees take advantage of significant tax savings, you realize savings as well. You do not pay matching FICA taxes nor Worker's Compensation* premiums on amounts passed through the plan. You can complete the worksheet to estimate your own savings. Most employers find that these savings exceed their administrative costs.
 
*Worker's Compensation savings are not available in all states. California employers can take advantage of these savings. Consult with your tax advisor to determine if it applies to you

Give Your Employees A Raise--And Yourself A Tax Break

For more information, call us at (916) 363-2101
James E. Deyo III, MBA, Principal/Director of Marketing ext. 229
Joe L. Gaither, President ext. 231

Savings Worksheet

Employee Savings:

Employee Paid Premiums

Sample Company

Your Company

Child/Adult Day Care

Unreimbursed Health Care

$18,000

$12,000

$5,000

$35,000

(A) Total Expenses

Employee Tax Savings

Ave. Federal Tax

Ave. FICA Tax

Ave. State Tax

(B) Employee Tax Rate

Employee Savings (A X B)

20%

7.65%

5%

32.65%

Employer Savings:

(C) Employer Tax Rate

7.65%

1.50%

Ave. FICA Tax

Worker's Comp. Rate

Employer Tax Savings

Employer Savings (A X C)

9.15%

%

%

%

%

%