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We offer cafeteria plans administered through Mayer Hoffman, McCann L.C.
( MHM Business Services, Inc. ), a Kansas City Certified Public Accounting
firm, pioneered the introduction of Section 125 Cafeteria Plans to business
owners, insurance marketers, CPA's and benefits consultants. The firm's
portfolio of products and services includes creative plan design, enrollment
systems, participant accounting, IRS compliance support, training seminars,
software, and technical assistance hotlines.
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MHM Business Services, Inc.
420 Nichols Road
Kansas City, Missouri 64112
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Toll - free Technical Assistance:
Hotline: 1 - 800 - 876 - 7548
E - mail: ezpopHELP@mhmbiz.com |
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One Simple Change in the Payroll Process Reduces Your Taxes
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The Premium Only Plan lets you cut payroll taxes without cutting your
payroll.
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The Section 125 Premium Only Plan ( POP ) saves you and your employees
money by reducing payroll taxes. It works by making one simple adjustment
in your payroll process: Employees pay their portion of insurance premiums
on a pre - tax basis rather than on an after - tax basis.
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The Premium Only Plan reduces your taxable payroll by reducing your employees'
taxable income. So, both you and your employees pay less in taxes.
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Example of Employer Savings
XYZ company has 10 employees
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Without POP
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With POP
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Annual payroll
Annual pre - tax payroll deductions*
Taxable payroll
Annual social security tax**
Total annual employer social security
tax savings
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$300,000
0
$300,000
$ 22,950
$ 0
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$300,000
-$ 24,000
$276,000
$ 21,114
$ 1,836
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Example of Employee Savings
John Doe: single, No Exemptions
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Without POP
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With POP
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Annual salary
Annual pre - tax contributions***
Taxable income
Estimated taxes(30.65%)****
Annual after-tax Contributions
Net take-home pay
Increase in take-home pay
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$30,000
0
$30,000
$ 9,195
$ 2,400
$18,405
0
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$30,000
-$ 2,400
$27,600
$ 8,460
0
$19,140
$735.00
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Total Employer & Employee Annual Savings
$9,186
( For a business with ten employees as illustrated above )
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* Based on insurance premiums averaging $200 per month per employee.
** Based on tax rate of 7.65%.
*** Based on a monthly premium of $200
**** Based on an average 20% federal, 7.65% FICA, and 3% state tax rates.
Note: Social security benefits could be affected.
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