This plan usually involves five elements: flexible benefit credits, minimum levels of certain benefits, optional benefits, cash credits, and tax deferral.In this plan, the employer generally allows each employee to spend a specified number of flexible credits, usually expressed in dollar amounts.The options in this plan have to include a choice whether or not to take cash in lieu of benefits.The cash element is necessary in order for a plan to be considered this type of plan for tax purposes.Identify this plan.
A)Health benefit plan
B)Retirement plan
C)Legal assistance plan
D)401(k) plan
E)Cafeteria plan

Question

Quizplus · Accepted Answer

The correct answer is E) Cafeteria plan. This type of plan allows employees to choose from a variety of pre-tax benefit options, including the option to take cash in lieu of benefits, which is a key feature described in the question.

This Plan Usually Involves Five Elements: Flexible Benefit Credits, Minimum