Cafeteria Plans were created by The Revenue Act of 1978 - amending the tax code to include Code Section 125. The Revenue Act of 1978 was the same legislation that enacted 401(k) retirement plans. Cafeteria Plans provide significant payroll savings for Employers and Employees. That's why they have become one of the most popular benefit plans in the United States.

Employees save 25% to 52% (based on their federal and state tax bracket) of their cost for (1) group insurance, (2) child-dependent care and (3) out-of-pocket health care expenses. The higher the Employee's tax rate, the more they save! That's because they don't pay federal, state or FICA taxes on salary contributed to any of the above three accounts.

Employers save by not matching Social Security costs of 7.65% and Workers' Compensation; usually an 8% to 10% payroll savings!

SECTION 125 PLAN PORTFOLIO

Converts employee's share of group insurance premiums from an after-tax expense to a pre-tax expense. The premium can be for "employee only" cost, "dependent" cost, or for any combination. (Note: Some states have restrictions on the maximum amount an employer may charge employees for "employee-only" coverage). Both Employer and Employees' tax savings is through the payroll system - no claims to file.

FLEXIBLE SPENDING ACCOUNTS ("FSAs")

Employees contribute untaxed salary to one or both FSAs - also known as reimbursement accounts. Your Plan may include one or both FSAs. The first FSA is for health care expenses not 100% covered by insurance. The second FSA is for dependent care expenses so the employee (and spouse, if married) can go to work. FSA Plans include the POP. As employees incur expenses, they submit claims to Trust Administrators and are reimbursed with their untaxed contributions (remains untaxed when filing their income tax return). TAI can provide reimbursement through an employer's payroll system, directly to an employee's bank account or from our bonded ERISA trust.

We also feature "smart" card technology which, in most cases, eliminates filing claims by employees. Employees use the card to pay for prescriptions, doctor co-pays, eyeglasses and dependent care expenses. Because the card is so convenient, it increases enrollment which means more payroll savings for everyone. (See Flex Convenience Card)

CAFETERIA PLAN

Employers establish a dollar value or credit using a "menu" approach for benefits; including a required "cash-out" option. Employees select the benefits they want. The menu may include: health, dental, vision, EAP, AD&D, LTD, STD, FSAs, vacation, 401(k), adoption expenses and term life insurance to $50,000. Unused credits may be converted to taxable salary. If employees buy more than the employer's allocation, they may set aside salary under one or both FSAs. If premiums exceed the employer's contribution, employees can pre-tax the group benefits with the POP feature.

SUMMARY OF TAI's SERVICES

• H.R. Meetings - Plan Design - Consulting
• Payroll and Banking interfaces
• Prepare Employer Materials: Plan Document, Summary Plan Description (SPD), Claim Forms, COBRA-Flex Form, Modification Form
• Monthly Reports reflecting Year-To-Date Status of all participant accounts
  (Includes internet online account activity)
• Check Register to Employer showing all participants paid for any period (applicable when TAI issues check)

PLAN IMPLEMENTATION

• Employee Materials: Sample letter, payroll stuffers, Video, Employee Summaries, Toll-Free Advice Line for Employees (Customized materials and printing available)
• Employee Meetings - group & individual, foreign language material available
• Certification - Welcome Letters: Notifying employees about their new Plan Year election amounts
• Employer Administrative Kit: List of IRS Approved Expenses and required information for nondiscrimination tests
• Perform nondiscrimination tests for all account

REIMBURSEMENT SERVICES AND YEAR-END ACCOUNTING

• Toll-Free advice line - Employee assistance all year
• Receive and adjudicate employee claims
• Reimbursements in paycheck, direct deposit, checks to home address or with Flex Convenience Card
• Third quarter letter to employees notifying them of their account balances
• Provide 90-day Claims Run-out after Plan Year ends
• Form 5500 Prepared - Signature Read

TAI - THE CLEAR CHOICE FOR YOUR SECTION 125 ADMINISTRATION

• Third-Party Administrator since 1984
• Professional and Courteous Staff
• User friendly website
• Easy to understand materials
• Online Enrollment and Account Lookup
• Flex Convenience Card - Works like a credit card for FSAs and Commuter Benefits.

For additional information, feel free to contact a TAI representative.