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Small Business Employee Benefits and HR Blog

What is a Salary Reduction Agreement for a Section 125 POP?

A salary reduction agreement is a written agreement between an employee and their employer in which the employee elects an amount of taxable income to be voluntarily withheld from their pay.

Salary reduction agreements and Section 125 POP  

Salary reduction agreements are the basis for Section 125 "Cafeteria Plans" that give an employee a choice between taxable income and a non-taxable benefit.

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