I need some help with a question I cannot seem to get answered about a POP 125 Plan. I am the bookkeeper for a small office 2 employees that are paid by manual payroll.
The owner wants the employees to contribute a portion of their monthly health insurance premium pre-tax.
There are no other plans in place - this is only for a medical premium.
We have been told to set up a POP Section 125 Plan. We have a 2 page document written up and it just needs to be signed by the employees.
How is the IRS aware of your plan once it is in place? I ask because I file the Quarterly and Yearly Payroll tax forms - 941's, etc.
If we are paying less in payroll tax then we should according to the gross payroll because of the pre-tax deduction, do I just adjust the gross payroll on the 941 to what it is after the insurance deductions?
Then on the W2's do you use that gross for the Federal gross amount but the regular gross for State, etc?
thank you!
