Purchase Solution

Flexible or Cafeteria Benefit Plan

Not what you're looking for?

Ask Custom Question

Explain the components of a flexible or cafeteria benefit plan. Discuss the hurdles that must be overcome before such plans will achieve greater acceptance and use. Explain the impact that the Revenue Act of 1978 has on these plans. Include examples and whether you believe these plans are effective or ineffective and why.

Purchase this Solution
Solution Summary

This solution explains the different components of a flexible or cafeteria benefit plan;and the hurdles that must be overcome before these plans will have greater use. It also explains the impact of the Revenue Act of 1978 on these plans. It gives examples of the plans and input on their effectiveness. Includes APA formatted references.

Solution Preview

Flexible benefits or cafeteria plan allow employees to choose between flexible benefit credits, minimum levels of certain benefits, optional benefits, cash credit and tax deferral "without the choice itself resulting in the inclusion of the tax-exempt benefits in taxable income" (HR.BLR.com, 2013). They are often referred to as Section 125 plans and are authorized by the Internal Revenue Code. They reduce both the employer's and the employees' tax bills but do not cost the employer (contrary to most benefits). Typically, an employer allows each employee to spend a specified number of flexible credits (often expressed in dollars) and allow the employee to take cash in lieu of benefits. There are different levels of complexity from paying group insurance premium with pre-tax dollar to providing benefit credits and choice of types and levels that may be chosen and paid either on a pre or post ...

Solution provided by:
Sally Baldwin, Ed.D
Education
  • BA, University of Southern California
  • MSS, United States Sports Academy
  • Ed.D, Boise State University
Recent Feedback
  • "Thk u"
  • "Thank you!:)"
  • "Thank you!:)"
  • "Thank you!:)"
  • "Thank you!:)"
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

View More Free Quizzes
Related BrainMass Solutions

  • Benefits and the Cafeteria Plan

    A cafeteria plan (sometimes called a flexible benefit plan) is a benefit plan that allows an employee to have some choice in designing his or her own benefit package by selecting different types and/or levels of benefits that are funded with nontaxable

  • Cafeteria Plans

    540676 Cafeteria Plans How do Cafeteria Plans benefit employers? How do they benefit employees? Please answer questions and provide supporting resources. The main benefit of a Cafeteria Plan for an employer is the tax savings that results.

  • Human Resource Management: Employee Benefits

    By offering the cafeteria plan, our company will not be paying extra for benefits that employees do not desire or need.

  • advantages and disadvantages of a cafeteria plan

    Benefits: A cafeteria plan allows an employee to choose where his or her benefit dollars will be spent. The plan can provide a number of selections, including medical, accident, disability, vision, dental and group term life insurance.

  • Non-retirement Benefits

    Plans (this is classified as a non-retirement benefit; however, I ran across one source that referred to it separately) A cafeteria plan is a flexible benefit plan that allows employees to choose their benefits within certain prescribed limits.

  • Mayfair Corporation - Downsizing Decision Making

    Wilco expects daily sales of 66 entrees and 94 sandwiches or salads. 1. Determine whether the plan for downsizing the current cafeteria operation would be acceptable to Mayfair Corporation. Show your calculations. 2.

  • Importance of Employee Benefit Plans

    Employee benefit plans are important to employees when applying for a job, as employees look for employers who offer pension plans, retirement plans, life insurance plans, or cafeteria benefits (flexible plans).

  • Designing a benefit plan for less than 100 employees: what type of benefits could be included?

    We will be offering a cafeteria plan. The nice benefit of a cafeteria plan is that people can choose what benefits they want or do not want based on personal individual factors.

  • James Richard's Employee Compensation Package

    After three months service he will be offered flexible hours option from the standard routine. 4. He will also be eligible for the standard discounts coupons at the cafeteria.

View More Related Solutions