How Employers Avoid Payroll Taxes and the 35% Excise Tax on HSA Savings - by

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Employers that make HSA Savings contributions for their employees outside of a Section 125 Premium Only Plan run the risk of being subject to the 35% Excise Tax, unless they make the contributions comparable. Numerous restrictions apply that can be avoided with a Section 125 Cafeteria Plan modified to handle HSA savings deductions. For a limited time, Core Documents, Inc.,, is offering the Section 125 Premium Only Plan Document with the HSA Savings Module at a discounted price of only $159.00.

Gene Ennis, the President of Core Documents, the nation's leading provider of affordable Section 125 and HRA plan documents, says that many employers still don't take advantage of pre-taxing employee HSA Savings through their Section 125 Plan because they simply don't understand the benefits. The main benefit is eliminating numerous IRS restrictions and additional comparability testing, secondary to that is the extra 7.65% in matching FICA tax savings.

For a limited time Core Documents is offering a discount on everything an employer needs to properly establish a new Section 125 Premium Only Plan with HSA Savings Module, or to update an existing Section 125 Plan to include the HSA Module. The price has been reduced to $159 plus $15 shipping and handling, instead of $179 plus S&H. See the order form to the right, or go to for an order application.

Employees benefit by eliminating an extra 7.65% in FICA taxes when deducting their HSA savings contribution through the company's Section 125 Cafeteria Plan. Of course all employees can eliminate the income tax on their year end tax return. By taking the deduction at year end the employee loses the extra 7.65% FICA deduction they would get through the Cafeteria Plan.

Employers also benefit by eliminating the matching FICA tax of 7.65% when their employees are allowed to use the Section 125 Cafeteria Plan for HSA savings contributions. Many employees and employers are paying an extra 7.65% in taxes by not utilizing the Section 125 Plan.

Suppose an employer has 10 employees each depositing $2,500 into their HSA savings account outside the company on their tax return. That's $25,000 in payroll the employer had to pay 7.65%, or $1,912.50, in matching FICA taxes, that their employees wrote off as non-taxable income. Together the employees also paid an additional $1,912.50 in FICA taxes by not utilizing the Section 125 Cafeteria Plan.

Therefore, employers will want to contribute to their employees' HSA savings accounts through the Section 125 Cafeteria Plan to eliminate the possibility of a 35% excise tax on the HSA contributions, plus to save an extra 7.65% in FICA taxes.

Employees will want to make their HSA savings contributions through the Section 125 Cafeteria Plan to get that extra 7.65% in FICA tax savings and have the convenience of regular payroll deductions.

Since 1997 Core Documents has been the primary source in the nation for affordable IRS and DOL compliant Section 125 and HRA plan documents. Call them at 1-888-755-3373 or see their website at Core Documents, Inc..

Important - To get the $159 discounted price please download the discount order form at Core Documents Sale Fax Order Form . Discount is not available to orders placed online through the website.

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Beth Davis
Core Documents, Inc.
888-755-3373 ext. 1002
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