Question

a. What are the seven major types of fringe benefits covered by Sec. 132?

b. What tax advantage is offered relative to such benefits?

c. Are such benefits available to employees only or may the benefits also be offered to spouses, dependents, and retirees?

d. Is discrimination prohibited relative to Sec. 132 benefits?

e. What is the tax impact on the employer and employees if an employer’s plan is discriminatory?

Original answer please. NO COPY AND PASTE

Answer 1

a) Seven major fringe benefits under sec 132:

• No-Additional-Cost Service
• Qualified Employee Discount
• Working Condition Fringe
• De Minimis Fringe
• Qualified Transportation Fringe
• Qualified Moving Expense Reimbursement
• Qualified Retirement Planning Services
• Qualified Military Base Realignment and Closure Fringe

b) tax advantage: Fringe benefits are Exempt from Tax.

c) provider: You’re the provider of a fringe benefit if it is provided for services performed for you. You’re considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you’re the provider of this fringe benefit even though the customer is actually providing the day care.

d) Is Discrimination prohibited?

Yes, Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan.