Jilliandiz Posted October 19, 2005 Posted October 19, 2005 What taxes are imposed for 125 deductions?
QDROphile Posted October 19, 2005 Posted October 19, 2005 I am only guessing at what you meant by your question, but salary reduction elections under section 125 reduce compensation for federal income tax purposes and wages for FICA tax purposes. In other words, the elected amount is not subject to to either tax. By contrast, 401(k) deferrals are excluded only from compensation for federal income tax purposes and not from wages for FICA purposes. Taxation by states is another matter.
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