Satisfying nondiscrimination rules permits plan participants to take tax deductions for qualified benefits.(Cafeteria Plans under Section 125)

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This is true. Section 125 of the Internal Revenue Code allows for cafeteria plans, which allow employees to choose from different benefits options. To qualify for tax-favored status, these plans must meet nondiscrimination rules, which mainly require that benefits be offered on a nondiscriminatory basis to all employees. By meeting these rules, plan participants are permitted to take tax deductions for qualified benefits.

Satisfying Nondiscrimination Rules Permits Plan Participants to Take Tax Deductions