Which of the Following is Ineligible to Participate in a Section 125 Plan and Why?

which of the following is ineligible to participate in a section 125 plan

When it comes to Section 125 Plans, understanding eligibility is crucial. These plans, often referred to as cafeteria plans, are primarily designed for employees of a company. In this guide, we’ll break down who can and can’t participate in these plans, focusing on the critical question: which of the following is ineligible to participate in a Section 125 Plan?

Who Can Participate in a Section 125 Plan?

Section 125 Plans are a popular benefit among full-time and part-time employees. These employees are typically eligible to participate because they are considered integral parts of the company offering the plan. Eligibility can sometimes vary based on the specific plan details and the company’s policies, but generally, if you’re a full-time or part-time employee, you’re in.

Key Points:

  • Full-time employees: Usually eligible.
  • Part-time employees: Generally eligible, depending on company policy.

Who is Ineligible?

However, not everyone qualifies. Independent contractors and seasonal workers usually fall outside the eligibility criteria for Section 125 Plans. Here’s why:

Independent Contractors

Independent contractors are self-employed and not directly tied to any one company as an employee. Since Section 125 Plans are designed for employees, independent contractors are typically ineligible.

Seasonal Workers

Seasonal workers, often hired temporarily to handle increased workload during certain times of the year, do not usually qualify for these plans. Their temporary status and the nature of their employment make them ineligible under most Section 125 Plans.


To sum up, the correct answer to which of the following is ineligible to participate in a Section 125 Plan? is:

  • c) Independent contractors
  • d) Seasonal workers

Understanding these eligibility criteria ensures that both employers and employees are well-informed about who can benefit from Section 125 Plans. For more detailed information, always refer to the specific plan documents and company policies.