Small Business needs to set up 401(k) w/Cafeteria Plan

[Guest ArachAmy]

Our business had utilized an employee-leasing service which provided very limited benefits packages, but did include a 401(k) program with the Cafeteria plan. We would now like to set up a 401(k) with Cafeteria plan (contributions before taxes) on our own for our employees -- currently just 2. How might we set-up such a plan with mutual fund and/or IRA providers?

[Guest TJG]

I know of a company that can set up the 401k plan, you may want to consider a SIMPLE plan as an alternative.

[Guest ESOPwizard]

With only two employees, why doesn't the employer just pay all of the medical expenses and forget about the 125 plan.

(For that matter, why don't you really simplify your life and go to a profit-sharing plan and save FICA taxes?

Frankly, I think that you are making a mistake trying to combine a 401(k) plan with a 125 plan.