In Sec 125 Plans, what must be true for cash benefits?

In Section 125 Plans, also known as Cafeteria Plans, the requirement regarding cash benefits is that they must not be prohibited by the Internal Revenue Code Section 125. This section specifically outlines the regulations governing the tax treatment of qualified benefits under these plans.

In a Section 125 Plan, the essential advantage is that employees can choose between different types of benefits (such as health insurance, dependent care, and various cash benefits) without being taxed on what they select. For cash benefits specifically, it's crucial that they align with the stipulations of IRC Section 125; otherwise, the plan could lose its favorable tax treatment.

The other options presented do not capture the primary condition about cash benefits under Section 125 Plans as effectively as the correct choice. Cash benefits can sometimes have limits, but this is not a universal rule defined in the context of IRC Section 125 itself. Similarly, while cash benefits can be provided on a non-taxable basis if they conform to the set requirements, they are not mandated to be offered this way for all cash types or scenarios. Offering benefits to all employees regardless of eligibility is not a foundational requirement of the plan; rather, the focus is on ensuring compliance with the IRC regulations. Hence, the key point