Section 125 plan setup checklist for employers

Before you open sign-ups

• Put one person in charge of the start date, payroll handoff, and employee questions.
• Gather your current benefits, payroll deductions, and work locations. Tell your adviser if you already have a written plan.
• Have your plan adviser review the benefits, who can join, start dates, employee choices, and any required fairness tests.
• Ask payroll which deductions are pre-tax and which are after tax. Check how each one is reported.

During sign-ups

• Tell workers what they can pick, what comes out of each check, and when they must choose.
• Keep a record of each choice and its start date. Share the final list securely with payroll.
• Tell workers who to ask if they get married, have a child, or need help with a change.

Before you send the first checks

Run a test for a person who joins, a person who does not, and a new hire who joins later. Compare each result with the written plan and the worker’s choice. Check pay, taxable wages, and the start date.

After the first payroll, match the deduction list with the sign-up records. Give payroll and the plan administrator one place to track fixes and future changes.