HOW WOULD YOU LIKE TO GIVE YOURSELF A RAISE IN PAY?

A FLEXIBLE BENEFIT PLAN THAT WILL REDUCE YOUR TAXES AND INCREASE SPENDABLE INCOME

It’s Called Flexible Benefit Plan

 Here’s How It Works!

You can establish a tax-free “Flexible Benefit  Account” with part of your earnings and use it to pay certain qualified expenses with pre-tax dollars - expenses that you now pay with after-tax income.

Because you will need to devote less of your actual earnings to pay these expenses, you will have more spendable income.

The amount you choose to have your employer put into your Flexible Benefit Account is deducted before Federal Income Tax is Calculated. This reduces your taxable income, meaning you pay less taxes.

What kind of expenses qualify?

	Health Related payroll deductions:
	Group Medical Plan
	Group Dental Plan
	Cancer/Catastrophic Illness Plan

 Are medical expenses eligible?

Yes, if paid so you and your spouse can work.  Included expenses are:
 

	Prescriptions
	Doctors co-pays
	Out of pocket dental costs
	Annual eye exam fees

 And are dependent child care expenses eligible?

Yes, included expenses are:
 

	Child care/babysitting
	After-school care/nursery school tuition
	Dependent parent daycare

What about special rules?

There are only a few: 

	You may enroll in the F.B.P. only once each Plan Year.
	If you opt out of the plan, you may not re-enroll for the rest of the Plan Year.
	You may establish your contribution only once each Plan Year.  Exception: If you have A change in family status such as marriage, divorce, death, birth, adoption, etc.
	Any amount left in your account at the end of the Plan Year is forfeited, under a provision of the law covering such plans.  Thus it is important that you plan carefully to be sure that the funds  in your account will be used.

Here’s an example of Flexible Benefit Plan savings:

This example is based on an employee who is married with two children.

Before

Current Situation:

Gross Pay per month                       $2,000
Federal Income Tax (20%)                 $  400
FICA Taxes (7.65%)                           $  153
Out-of-Pocket Medical
Expenses (after-tax)                        $  130

Spendable Income                        $1,317

____________________________________

 After Section 125

Gross Pay per month                       $2,000
Medical Deduction                          $  130
Taxable Income                              $1,870

Federal Income Tax (20%)                 $  374
FICA Taxes (7.65%)                           $  143 

Spendable Income                         $1,353

Monthly Increase
Spendable Income                         $    36

Note: Your eligible expenses may be more or less than shown in this example.

Take the Flex Test!

Please download and complete the pdf worksheet to find out if the Flexible Benefit Plan will benefit you.  Your answers will allow you to estimate the tax savings that will increase your spendable income.