Cafeteria plans are employer-sponsored plans that allow employees to pay for benefits with a before-tax payroll deduction. An employee’s taxable wages are reduced, but you must include the total (unreduced) salary for your monthly report to the System.
An example of a cafeteria plan benefit is a dependent care account, which helps employees pay for child, elder or disabled dependent care. Other examples include pre-tax programs for health, dental or life insurance premiums.
If you are interested in establishing a cafeteria plan or have questions about these plans, please contact the Internal Revenue Service (IRS). The IRS administers cafeteria plans and decides whether a plan meets the criteria.