McGriff Homepage

Compliance Q&A: Cafeteria Plan Eligibility – S-Corporation Owners

Summary

Employers of all types can sponsor an IRC Section 125 cafeteria plan and permit their employees to pay for qualified benefits on a pretax basis. However, if the employer’s organizational structure is such that the owners are considered to be self-employed individuals, then the owners cannot participate in the Section 125 plan. More than 2% owners of an S-Corp are considered to be self-employed individuals and not employees. Adverse tax consequences will occur if any self-employed individual is permitted to participate in the Section 125 plan.

Read the full McGriff Compliance Q&A

Insurance products and services offered through McGriff Insurance Services, Inc., a subsidiary of Truist Insurance Holdings, Inc., are not a deposit, not FDIC insured, not guaranteed by a bank, not insured by any federal government agency and may go down in value.

McGriff Insurance Services, Inc. CA License #0C64544