A separate written plan maintained by an employer that allows employees to choose among cash and one or more qualified benefits provided on a pretax basis (see Practice Note, Cafeteria Plans). Generally, qualified benefits are those that are expressly excluded from an employee's gross income under an Internal Revenue Code (Code) provision and include certain:

The plan also must meet the requirements of Code Section 125, which includes a prohibition on discriminating in favor of highly compensated individuals and key employees. Cafeteria plans generally do not allow deferred compensation, except in limited circumstances.