Accounting for Section 125 Cefeteria plans (US)

Tim Wunder tim at
Tue Dec 13 11:58:05 EST 2005

My company will be instituting a Section 125 Cafeteria plan (flexible spending 
account) for medical expenses. Starting January 1, 2006, my flexible spending 
account will have $1000 available to it. Each payday (weekly), a specific 
amount of money (1000/<53 or 52>) will be deducted from my pay pre-tax and be 
designated for the flexible spending account. So, at the start I will only 
have a small amount actually deducted from my income assigned to the flex 
account, the full $1000 will be available for me to use for medical expenses.

How should I configure gnucash (1.8.11) to account for this?
I'm thinking I should at least set up an asset account for the $1000. That's 
the easy part. The hard part (for me) is determining what account that $1000 
comes from, and what account the weekly deductions should be updating.

My current thinking is that I should set up an Income account, Income:Flex 
from which a transfer of $1000 will be made to credit the Income:Flex account 
and debit the Assets:Flex account on January 1 (when the money will become 
available for use). Each week I'll add a split to my payday transaction that 
currently credits Income:Salary the amount of the specific pre-tax payroll 
deduction as a debit to Income:Flex the amount (along with other debits to 
Assets:Checking, Expenses:Tax, etc...).

Is that right?
Seems like it to me, but I'd like to throw it out there so (perhaps) someone 
who might actually know how it's s'posed to be done.

Fedora Core release 4 (Stentz), Linux 2.6.14-1.1644_FC4
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"It's what you learn after you know it all that counts" John Wooden
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