Accounting for Section 125 Cefeteria plans (US)
warlord at MIT.EDU
Tue Dec 13 12:38:50 EST 2005
IANAA but how I would set this up:
At the beginning of the year, xfer $1000 from L:F -> A:F
Then at every pay period, split your FLEX deduction into L:F from your
normal Income:Salary account.
When you USE your flex money, use it from A:F -> Expense:Medical:whatever.
The difference between the Asset and the Liability is how much you lost
You could probably do it as contra accounts instead, if you prefer:
+--To Spend (Asset)
+--To Deduct (Liability)
Same rules as above.
Quoting Tim Wunder <tim at thewunders.org>:
> My company will be instituting a Section 125 Cafeteria plan (flexible
> 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
> KDE: 3.5.0-1.7.fc4.kde, xorg-x11-6.8.2-37.FC4.49.2
> 11:30:06 up 1 day, 21:57, 4 users, load average: 0.27, 0.47, 0.28
> MP3/OGG archive Total playlength : 7 days, 16 hours, 27 mins 40 seconds
> "It's what you learn after you know it all that counts" John Wooden
Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
Member, MIT Student Information Processing Board (SIPB)
URL: http://web.mit.edu/warlord/ PP-ASEL-IA N1NWH
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