Employer Checklist for Offering Benefits
Step 1: Choose the Right Benefits Plan
The first step in offering benefits is choosing the right Section 125 Plan for your business. There are several options to choose from, depending on the size of your business and what you want to offer your employees.
Your options include:
Premium Only Plans (POP): for simple health insurance premiums
Full Cafeteria Plans: offering a broader range of benefits
Flexible Spending Accounts (FSAs): for medical and dependent care savings
Dependent Care Assistance Plans (DCAP): for child care and dependent care
Commuter Benefits: for transportation and parking savings
Understand each plan type to choose the best fit for your business.
Step 2: Work with a Trusted Provider
Partner with Experts to Manage Your Plan:
Once you’ve chosen your plan, it’s important to work with a trusted provider who specializes in Section 125 Plans. Your provider will help you set up the plan, manage employee enrollments, and ensure that you stay compliant with IRS regulations.
What the provider will help with:
Drafting a compliant plan document
Setting up pre-tax payroll deductions
Enrolling employees and offering benefits
Conducting IRS compliance testing
Work with experts who will help manage the details of your plan.
Step 3: Communicate Benefits to Employees
Clear communication is key to a successful benefits program. Once you’ve set up your plan, let your employees know what benefits are available to them and how they can sign up.
Tips for communicating with employees:
Hold informational meetings or webinars
Provide written summaries of benefits and instructions
Create easy-to-understand enrollment guides
Offer support for any questions or concerns
Make communication easy and clear for your employees.
Step 4: Set Up Payroll Deductions
To keep things running smoothly, your Section 125 Plan must be integrated with your payroll system. This ensures that employee contributions are deducted pre-tax and that the correct amounts are sent to the appropriate benefit providers.
What you need to do:
Work with your payroll provider to set up pre-tax deductions
Make sure benefits are deducted before taxes are calculated
Track participation and make adjustments as needed
Provide employees with their tax savings details at year-end
Ensure your payroll system works seamlessly with your Section 125 Plan.
Step 5: Maintain Compliance and Keep Records
Stay Compliant with IRS and State Regulations:
One of the most important parts of offering benefits is staying compliant. As an employer, you need to ensure that your Section 125 Plan meets all IRS and state requirements. This includes keeping proper records and submitting required reports.
What to do to maintain compliance:
Keep accurate records of employee enrollments and elections
Conduct nondiscrimination testing annually to ensure fairness
File necessary tax forms for your business and employees
Update plan documents if changes are made
Stay compliant and avoid potential issues with the IRS.
Step 6: Monitor Employee Participation
Track Employee Participation and Adjust When Needed:
Once your Section 125 Plan is in place, keep track of employee participation. You may need to make adjustments based on employee needs or changes in benefits offerings.
Things to monitor:
Employee enrollment in available benefits
Changes in employee life events, such as marriage, birth, or adoption
Mid-year changes to employee elections for benefits
Make sure employees are getting the most out of their benefits.
Step 7: Conduct Annual Reviews
Review Your Benefits Program Every Year:
To ensure your benefits program is working effectively, conduct an annual review. This gives you the chance to assess employee satisfaction, make improvements, and adjust benefits based on changing needs or IRS rules.
What to review:
Employee feedback on the benefits offered
Tax savings to ensure the program is maximizing value
Changes in IRS rules that may require plan adjustments
Review and refine your plan to keep it running smoothly.
Step 8: Provide Ongoing Support
Keep Employees Informed and Supportive:
Offering benefits is an ongoing responsibility. Be sure to offer continuous support to your employees so they know how to use their benefits, make changes, and ask questions.
Ways to offer ongoing support:
Set up regular check-ins with employees to answer questions
Provide resources like online guides or videos for employees
Offer customer service for employees who need help with claims or benefits questions
Ensure employees feel supported with their benefits every step of the way.
Ready to Offer Benefits to Your Team?
Offering a Section 125 Plan can be a great way to enhance employee satisfaction while saving your business money. By following this Employer Checklist, you can set up your plan, stay compliant, and ensure that your employees get the tax-saving benefits they deserve. Take the first step today to offer smarter benefits to your employees.
Start Saving Now with Our Calculator
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Estimate how much your business could save on payroll taxes.
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Get a clear picture of your potential tax savings.
Start now and find out how much you could save!
📣 Disclaimer: Calculations provided are for informational purposes only and do not guarantee specific savings. Actual savings will vary based on individual circumstances.
Book Your Consultation
Explore how Section 125 plans could save your business over $1,000 per W-2 employee each year. Book a free consultation to see how much you could be losing by not having one.
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