| |
|
|
If you're going to be spending the money anyway, why
not make it tax-free?
Utilizing a Cafeteria
Plan, an employee can spend the same money for the same benefits they currently
have and receive more take home pay! Below is an illustration of an employee's
monthly take home pay before and after implementing a Cafeteria Plan.
EXAMPLE: Married,
$25,000 annual salary
|
WITHOUT
CAFETERIA
PLAN |
|
WITH
CAFETERIA
PLAN |
|
| MONTHLY SALARY |
$2,084.00 |
$2,084.00 |
| Insurance Premiums |
0.00 |
-265.00 |
| Dependent Care |
0.00 |
-200.00 |
| Unreimbursed Medical |
0.00 |
-100.00 |
|
|
|
| TAXABLE INCOME |
$2,084.00 |
$1,519.00 |
| |
| FICA (7.65%) |
-159.43 |
-116.20 |
| Federal Tax (1.59%) |
-312.60 |
-227.85 |
| State Tax (5%) |
-104.20 |
-75.95 |
|
|
|
| NET PAY |
$1,507.77 |
$1,099.00 |
| |
| Insurance Premiums |
-256.00 |
0.00 |
| Dependent Care |
-200.00 |
0.00 |
| Unreimbursed Medical |
-100.00 |
0.00 |
|
|
|
| SPENDABLE INCOME |
$942.77 |
$1,099.00 |
Increase in spendable income: $156.23 a month, $1,874.76 per
year
|
|
|
|
