How does a Section 125 Plan work?

Estimate Your Section 125 Plan Savings

Video Transcript:

Did you know Your employer may offer a way to make benefits more affordable? If your employer offers a Section 125 plan, some of your benefits are deducted pre-tax, allowing you to have more spendable income.

Section 125 plans may include medical, dental, and vision insurance; flexible spending accounts; health savings accounts; and supplemental insurance plans like disability, cancer, and life.

Let's see how this works in a real life example. Meet Jim. Jim earns $52,000 a year, or $2,000 biweekly. He elected benefits with a total monthly premium of $390. He chose not to participate in Section 125 benefits. As a result, his net pay for each paycheck is $1,252. Let's look at what would've happened if Jim had chosen to take part in his employer's Section 125 plan. This option deducts insurance premiums before taxes, which would've lowered his taxable income. Jim's biweekly net pay would've been $1,306, resulting in an extra $54 per paycheck. This would've amounted to a yearly savings of $1,404 for Jim.

We can help you create a personalized plan today for the expenses of tomorrow.

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