Question

Under a cafeteria plan how can EEs obtain or purchase benefits?

A. Flex dollars - ER paid
B. Salary reduction - pretax dollars
C. Payroll deductions - post tax dollars
D. All of the above

Answer 1

Employees can obtain or purchase benefits under a cafeteria plan through flex dollars (employer paid), salary reduction (pretax dollars), and payroll deductions (post tax dollars).

Step-by-step explanation:

Under a cafeteria plan, employees can obtain or purchase benefits through various methods:

1. Flex dollars - employer paid: In this case, the employer allocates a certain amount of money to each employee, which they can use to purchase benefits of their choice. The employer pays for these benefits using flex dollars.
2. Salary reduction - pretax dollars: Employees can choose to have a portion of their salary reduced before taxes are calculated, and use that amount to purchase benefits from the cafeteria plan. This allows them to save on income taxes.
3. Payroll deductions - post tax dollars: Employees can also choose to purchase benefits from the cafeteria plan by having the cost deducted from their post-tax salary. In this case, they would pay for these benefits using post-tax dollars.

So, the correct answer is D. All of the above.