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WIMPER INSTITUTE EXECUTIVE BRIEF
Section 125 & 105 FICA Recovery Strategy
January 2026

Executive Brief

Section 125 & 105 FICA Recovery Strategy for Employers

Prepared for: Employers evaluating payroll tax optimization

Purpose: Provide a CFO-level overview of the WIMPER-aligned program structure, financial impact, and compliance architecture under IRC §§ 125, 105(b), and 213(d).

1. Executive Summary

Employers frequently over-remit payroll taxes on dollars that can legally be redirected into qualified benefits through IRS-approved pre-tax structures. A properly designed Section 125 + Section 105(b) Self-Insured Medical Reimbursement Plan (SIMRP) allows employers to reduce their FICA liability while simultaneously enhancing employee benefits with no reduction in take-home pay.

~$1,120 Per Employee/Year
FICA Savings 		$1,800+ Per Employee/Year
Benefit Value 		30-45 Days Implementation
Timeline

This brief summarizes the financial, legal, and operational considerations for CFOs evaluating the program.

2. The Financial Mechanism

The WIMPER-aligned strategy operates through two IRS-recognized structures:

A. Section 125 Cafeteria Plan

Allows employees to make pre-tax elections, reducing taxable wages and the employer’s payroll tax base.

B. Section 105(b) SIMRP

Reimburses qualifying §213(d) medical expenses on a tax-free basis.

Together, these structures convert a portion of taxable wages into pre-tax structured benefit allocations, qualified medical reimbursements, employer FICA savings, and meaningful employee benefit expansion.

3. Financial Impact for Employers

Employer Outcomes

  • Reduced gross FICA wage base
  • Increased net cash flow
  • Predictable, recurring savings
  • No impact to operating headcount
  • Immediate EBITDA improvement

Employee Outcomes

  • Higher net benefit value
  • $0 cost supplemental coverage options
  • Access to modern preventive care
  • Improved satisfaction without reducing paycheck
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4. Compliance Architecture

WIMPER Institute’s educational framework is grounded in IRC §125 (Cafeteria Plans), IRC §105(b) (Tax-Free Medical Reimbursement), IRC §213(d) (Qualified Medical Expenses), and ACA/ERISA/HIPAA requirements.

What This Program Is NOT

This is not a fixed-indemnity cash plan and does not use cash benefits that trigger IRS “double dipping” issues described in CCM 202323006. This program avoids cash indemnity payouts, tax-free cash benefits, and participation-only payouts.

What Makes This Program Compliant

5. Employee Experience & Benefit Stack

Employees receive a comprehensive suite of benefits with no net take-home pay reduction:

  • Virtual primary care
  • Virtual mental health & counseling
  • Chronic condition coaching
  • Urgent telemedicine
  • Weight-health and metabolic support
  • Supplemental accident/disability/life benefits

6. Implementation & Review Process

Typical timeline: 30–45 days

  1. High-Level Savings Estimate: Based on basic census and W-2 averages.
  2. Confidential ProForma: Prepared using your actual payroll assumptions.
  3. Payroll Coordination Session: CFO + payroll provider + implementation specialist confirm wage categories and withholding rules.
  4. Employee Launch: Communications, onboarding, enrollment support.
  5. Ongoing Compliance Support: Documentation, attestations, claims review.

7. Next Step for CFOs

Request a Verified ProForma

A verified ProForma will use your actual payroll file to model participation by job class, incorporate industry-specific wage assumptions, and produce a CFO-ready financial model.

This is the document you will use to make a P&L decision.

Disclosures & Limitations: WIMPER Institute is an educational resource. We do not sell insurance, administer plans, or provide legal/tax advice. Final employer savings vary depending on wage distribution, participation, payroll accuracy, and benefits integration.
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