Cafeteria Plan

A flexible benefit plan (or "flex plan") allows employees to select benefits or level of coverage from a menu of benefits offered by an employer. Employees may choose the benefits they want to receive. A cafeteria plan is a flex plan that satisfies the requirements of Section 125 of the Internal Revenue Code (IRC). These requirements include limited participation, offering both taxable and qualified benefits, no deferral of compensation, and no discrimination in favor of highly compensated employees. Only certain benefits are eligible for inclusion under a cafeteria plan, including medical reimbursement benefits, accident or health insurance, group-term life insurance, dependent care assistance benefits, and vacation days.