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What is the S.E.E.D. Plan and how does it work?  top
A plan based on 1954 tax law that allows for "the working family". The self-employed person hires their spouse and provides a medical reimbursement plan and W-2 wages. All family health insurance premiums and any out of pocket medical expenses are reimbursed to the spouse from the company checkbook as part of the plan. The reimbursements paid to the spouse are not included as income and the business deducts these costs as an operating expense. Corporations operate under slightly different rules. To see a more complete explanation of those companies that qualify click here.
What kind of medical expenses can be deducted? top
Family insurance premiums such as: medical, dental, vision, cancer, certain long-term care, disability and life insurance on the employee. You can also deduct medical expenses not reimbursed by third party payers. View a more complete list.
How much could I save in taxes? top
The last several years our clients have had average tax savings of over $2000 a year by using the S.E.E.D. Plan. See what you could save.
Can my company benefit and qualify for the Section 105 medical reimbursement plan? top
All companies can benefit by implementing the S.E.E.D. Plan:
- Those operating their business as a sole proprietorship, partnership, LLC or (C) and (S) Corporations.
- Companies where the owner's spouse is or could be a bona-fide employee
- Businesses that have few if any employees other than family members
- Families that have medical insurance premiums and out of pocket health care expenses not paid for by their insurance company
- Employers whose taxable business income is below the self-employment or Social Security wage base of $87,000 in 2003
More complete explanation of those companies that qualify.
Can (S) Corporations take advantage of medical reimbursement plans? top
Yes. Shareholders electing S-corporation status and executing a medical reimbursement plan as allowed by several IRS tax codes can save taxes. The corporation can implement an employee benefit plan to include reimbursement to the stockholder-employee of family health insurance premiums and all unreimbursed medical expenses. To see a more complete explanation of those companies that qualify click here.
Do I have to cover all the company's employees? top
Most employers want to cover only family members. If you have employees other than your spouse, you must follow nondiscriminatory rules required by the labor department. See who can be excluded.
How does the government view Section 105 plans? top
The Section 105 plans are not well known, but legal. Currently there are over 50,000 self-employed people in the United States participating in these plans. More than thirty years ago the IRS addressed this issue. Since that period of time it has been reviewed by the service a number of times. Several of their writings: Internal Revenue Service (Letter Ruling 9409006) and Revenue Ruling 71-588.
What would you do for us and how expensive is the S.E.E.D. Plan? top
The S.E.E.D. Plan is a "turn-key" implementation and administrative service designed to insure proper documentation of your employee benefit plan. Services and costs.
Can I or my tax consultant do this ourselves? top
There are IRS, DOL and ERISA guidelines that Section 105 plans must follow. Our plan provides a convenient, reliable and inexpensive approach to meeting these rules and regulations. Most tax consultants do not specialize in employee benefit planning and prefer to use an outside agency. We look forward to working with your consultant to provide these services.
How much administrative time is this going to take me? top
By utilizing the services of the S.E.E.D. Plan you will have a minimal management requirement. Our clients tell us they spend no more than two-four hours throughout the year administering their plan. When you consider the average yearly savings is in excess of $2000 the time is well spent.
Can I invest the S.E.E.D. Plan tax savings in my retirement program? top
A retirement planning firm could help you set up or expand a retirement portfolio. As an example, for every $1000 of S.E.E.D. Plan tax savings you invest in a qualified retirement plan you can actually deposit $1175 (based on the lowest FIT rate). This is true because the retirement deposit is ALSO a tax deduction.
Why should I make a decision now? top
The IRS does not allow backdating of medical reimbursement plans. It is important to start immediately to save tax dollars. The S.E.E.D. Plan can be started any day of the year.
If this is so good why haven't I heard of these plans before? top
In the 1970's these plans were very popular. The IRS imposed some limits on the plans in the early 1980's and the use diminished. In recent years the increasing cost of healthcare and insurance premiums, combined with fewer deductions allowed for the small employer, has created renewed interest in medical reimbursement plans.
Can I presently deduct my family's medical insurance premiums? top
Current law allows the small employer to deduct only part of the qualified medical insurance premium they pay to arrive at the adjusted gross income. The S.E.E.D. Plan allows a full 100% deduction against the FIT as well as the self-employment tax and any state tax. Thus, substantially more taxes are saved.
What would I have to do to sign up for the S.E.E.D. Plan? top
Implementing the S.E.E.D. Plan is fast, easy and convenient. We will:
- Analyze your situation to see if you can save tax dollars
- Customize a Section 105 Plan for your company
- Coordinate with your tax consultant
- Provide all the answers you need
- Supply you with the necessary enrollment forms to implement your plan
Email us with your contact information or inquire about the S.E.E.D. plan. © 1996 - 2007 Flex Benefits & Administration
Email: kent@seedplan.com |
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