Premium Only Plans (POP) Details

The Premium Only Plan lets you cut payroll taxes withour cutting your payroll.

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.

The premium Only Plan reduces your taxable payroll by reducing your employee's taxable income. So, both you an your eemployees pay less in taxes.

Lower Taxes is Just One Advantage

One of the best ways to save taxes

IRS-sanctioned Premium Only Plans were created by the Revenue Act of 1978 and are governed by Internal Revenue Code Section 125. With a POP:

• Employees don't pay FICA, federal, or where applicable, state or local taxes on money used to pay for their portion of employer-sponsored insurance premiums, or contributions to their Health Savings Account (HSA).
• Employees' tax savings help defray the cost of insurance premiums.
• Employees can increase their take-home pay.
• Your taxable payroll is reduced by the total amount of employee contributions for benefits. Lower taxable payroll means lower payroll taxes.
• You can allow employees to realize an increase in take-home pay and take credit for a terrific new benefit, while still saving money.
• You can increase your employees' share of insurance premiums without negatively affecting their take-home pay.

If you are not requiring employees to contribute to the cost of their insurance, a Section 125 Premium Only Plan allows you todo so with the least impact on employee salaries

Any employer can sponsor a Premium Only Plan

Regular corporations, partnerships, S corporations, limited liability companies (LLCs), sole propri-etors, professional corporations, and not-for-prof-its can all save money on payroll taxes by establish-ing a Premium Only Plan.

Who can Participate?

While regulations prohibit a sole proprietor, part-ner, members of an LLC (in most cases), individu-als owning more than 2% of an S corporation, or their spouse and dependents, from participating in the POP, they may still sponsor a plan and benefit from the savings on payroll taxes.

Begin saving taxes immediately

You can start a Premium Only Plan at any time. Plus, you can have a short plan year for the first year so that future plan years coincide with either your fiscal year or the calendar year. The choice is yours.

Typically, your first-year tax savings with a POP plan will far exceed the suggested retail price for plan administration.