![](https://images.benefitspro.com/cdn-cgi/image/format=auto,fit=contain/https://images.benefitspro.com/contrib/content/uploads/sites/412/2018/11/08_Tax_Rates_Form_Numbers_MI.jpg)
I recently worked with a large employer to transition their voluntary benefits (VB) from a traditional payroll deduction model to a more efficient split direct deposit model. Most employers that are choosing to shift to a split direct deposit model are doing so because it allows them to eliminate the monthly billing and reconciliation chores that frustrate most HR departments when it comes to voluntary benefits. But, when I asked this large group why they were switching to a direct deposit model, the answer was not just billing issues; it was because their broker had recommended they cease pre-taxing VB because of the tax implications now imposed by the IRS.
IRS rulings about the taxability of voluntary benefits paid for with pre-tax dollars through a Section 125 plan have always been an issue. But today, the move away from pre-taxing of VB is stronger than ever, led by the large broker houses, consultants, and the good old IRS.
Continue Reading for Free
Register and gain access to:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.