POP Plan Document: A Smart Tool for Pre-Tax Benefits and Business Savings

 When it comes to maximizing employee benefits while reducing taxable income, a POP plan document—short for Premium Only Plan—offers one of the simplest and most cost-effective solutions. Authorized under Section 125 of the IRS tax code, a POP plan allows employees to pay their portion of insurance premiums using pre-tax dollars. But to comply with IRS regulations, employers must have a valid and up-to-date POP plan document in place.

What Is a POP Plan Document?

A POP plan document is a written plan that outlines how a company will administer its Section 125 Premium Only Plan. This document is required by the IRS and details the rules, eligibility requirements, and benefits of the plan.

By implementing a compliant POP plan document, employers can allow employees to deduct their share of health, dental, vision, and other insurance premiums directly from their paychecks before taxes are calculated. This reduces taxable income for employees and lowers payroll taxes for employers.

Benefits for Employers and Employees

A well-prepared POP plan document delivers multiple advantages:

  • Employer Benefits: Employers save approximately 7.65% in FICA taxes on every dollar employees contribute pre-tax to insurance premiums. These savings can add up significantly over time, especially for businesses with multiple employees.

  • Employee Benefits: Employees enjoy increased take-home pay because their taxable income is reduced. Over the course of a year, this could mean hundreds of dollars in savings depending on the cost of premiums.

Compliance Made Easy

It’s important to note that the IRS requires every business offering a POP plan to have a written document in place. Failure to provide a compliant POP plan document can result in tax penalties and disqualification of the plan’s pre-tax benefits.

That’s why working with trusted providers, like those featured in this Core Documents, is essential. These providers help ensure your documentation meets federal requirements, offers audit protection, and is updated annually to reflect regulatory changes.

Streamline Benefits with a POP Plan Today

Whether you’re a small business or a large organization, implementing a Section 125 plan backed by a compliant POP plan document is a smart financial move. It boosts employee satisfaction, supports your HR goals, and delivers real tax savings on both sides.

To learn more about how a POP plan document can help your business and employees save, visit the full article on Core Documents.

 

For more info visit here:- Tax-free insurance premiums

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