If your employees pay a portion of their group insurance premiums, you may be able to reduce your payroll taxes, and give workers a little extra in their checks each and every payroll. How? By letting us handle payroll deductions for insurance premiums with a premium only plan.
A premium only plan, or POP, allows employees to make contributions to their group health, dental, and term life insurance before taxes are calculated. Under section 125 of the Internal Revenue Code, employees save FICA and federal income tax on their insurance deductions with every paycheck. Also, in most states, emloyees can save the state income tax on these deductions.
You can save too, because eligible businesses do not pay FICA matches or FUTA tax on employee medical deductions. For many small- to medium-size companies, the savings can be substantial.
But POP paperwork is time-consuming. IRS plan requirements are stringent and, of course, very complicated.
Fortunately, no one is more qualified to cut through the red tape for you than Advantage. We make it easy for you and your employees to get everything that's coming to you. Our complete and affordable POP services include:
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Sample plan document |
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Employee enrollment forms |
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Enrollment and annual re-enrollment administration |
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Nondiscrimination testing |
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Here's how much an employee with gross income of $2,500 each month could save with a POP.
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| Gross Wages |
$2,500.00 |
| Taxable Wages |
$2,500.00 |
| FICA |
$191.25 |
| Fed. Tax (20%) |
$500.00 |
| State Tax (10%) |
$250.00 |
| Insurance |
$200.00 |
| Net Pay |
$1,358.75 |
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| Gross Wages |
$2,500.00 |
| Insurance |
$200.00 |
| Taxable Wages |
$2,300.00 |
| FICA |
$175.95 |
| Fed. Tax (20%) |
$460.00 |
| State Tax (10%) |
$230.00 |
| Net Pay |
$1,434.05 |
| Monthly Savings |
$75.30 |
| ($1,434.05 - $1,358.75) |
| Annual Savings |
$903.60 |
| ($75.30 x 12) |
Here's how much you could save on this employee if your business had a POP.
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| FICA Match |
$191.25 |
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| FICA Match |
$175.95 |
| Monthly Savings |
$15.30 |
| ($191.25 - $175.95) |
| Annual Savings |
$183.60 |
| ($15.30 x 12) |
A small business with 10 employees participating in the above scenario would realize savings of at least $1,836.00 (10 x $183.60) in FICA match alone.
Contributions to a POP plan are also exempt from FUTA, and in many states, SUTA.
For more information about our products and services, contact an Advantage Payroll Services representative at an office location nearest you. Or, use our online form and we will contact you. |
