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A Cafeteria Plan is a voluntary plan which gives you the opportunity to pay some of your ordinary expenses with pre-tax dollars. (Click here to return to Top) Expenses such as day care, medical and dental insurance premiums, and out-of-pocket health care expenses can be paid with pre-tax dollars. Cafeteria Plans can literally save you hundreds and sometimes several thousand dollars in taxes.(Click here to return to Top) Money which you place into the Cafeteria Plan escapes Federal and State income tax and Social Security Tax. By adding these three tax brackets together, you will find that your tax savings is equal to 28% to 50% of the amount contributed to the Cafeteria Plan. (Click here to return to Top) First, you must be eligible for the plan. Next, decide which Spending Account(s) you want to participate in. Estimate your annual expenses in each account, and complete the Enrollment Form. For example, assume you have a child in day care at a cost of $400 per month, or $4,800 per year. Complete the Cafeteria Enrollment form with an annual day care election of $4,800. (In this example, your estimated tax savings would be about $1,100. $4,800 x 33% less the estimate tax credit of $480). (Click here to return to Top) Once you join the plan, here is how the money flows. Per your election, money is deducted from your paycheck and placed into a tax free checking account. As you incur out-of-pocket medical or day care expenses, you completet a Cafeteria Plan Claim form, attach copies of receipts, and fax (303)-369-0003, without cover page) or mail this form directly to RPS Plan Administrators. RPS will then mail a check reimbursing you for the expense and mail that payment directly to your home. (Click here to return to Top) Can I change my election during the plan year? Generally, no. However, you may change your annual election if you have a change in family status. This includes:
What happens if I terminate my employment? At the time of termination your contributions to the Cafeteria Plan will cease. Any qualified expenses which you incurred prior to your date of termination can be submitted to the plan administrator for reimbursement, providing these claims are submitted within the number of days listed in your plan document after the end of the plan year. (Click here to return to Top) Can I submit expenses which were incurred in a prior plan year or at a time when I was not a participant? No, the expenses that you submit for reimbursement must be for services rendered to you within the Cafeteria plan year, and during the period of time in which you were a participant in the plan. It does not matter when you paid the bill or received the bill; the key issue is the date the services were rendered to you. (Click here to return to Top) What if I do not use all my money in the plan? You have until the number of days listed in your plan document after the end of the plan year to submit expenses for services rendered to you during the plan year. After that, any money left in your account will be forfeited by you. Legally, the money cannot be returned to you. (Click here to return to Top) No, the average forfeiture is generally less than $10. Many participants never forfeit money. Even if you do forfeit money, it is important that you compare your forfeiture to your tax savings. For example, if you contribute $1,000 to the Cafeteria plan, you will save about $300 in taxes. Suppose you forfeit $100, an unusually high forfeiture amount. You still are ahead by $200. You will never forfeit money for lack of information. Every time you receive a reimbursement check, the memo portion of the check will include a summary of your account balance. You will also receive a quarterly participants statement. Finally, 24 hours a day you can call the automated Voice Response Unit (VRU) at RPS Plan Administrators and hear the current value of your account, as well as other information. (Click here to return to Top) What Dependent care expenses can by reimbursed from the Cafeteria Plan? You may be reimbursed for Dependent Care expenses incurred for a dependent under the age of 13, or a dependent child or adult who is physically or mentally incapable of caring for themselves. These expenses must be incurred during the period of time that you are a participant in the Dependent Care plan. If the expenses are incurred for services provided by a dependent care facility which provides care for more than six individuals not residing at the facility, the center must be licensed. The expenses cannot be paid or payable to a child of yours who is under the age of 19. Please see your plan’s Summary Plan Description for more information. (Click here to return to Top) What non-insured medical expenses can be reimbursed from the Cafeteria Plan? Here is a representative list of eligible expenses. See the Summary Plan Description for more examples.
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2851 South Parker Road, Suite 230 Aurora, Colorado 80114 |
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Toll Free (800) 651-4885 Tel (303) 369-7886 Fax (303) 369-8283 |
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Copyright 2001 RPS Plan Administrators, Inc. All Rights Reserverd |
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