Definition of 'Cafeteria Plan'
An employee benefit plan that allows staff to
choose from a variety of benefits to formulate a plan that best suits their
needs. Cafeteria plan options may include health and accident insurance, cash
benefits, tax advantages and/or retirement plan contributions.
Also
known as "cafeteria employee benefit plan" or "flexible benefit
plan".
Investopedia explains 'Cafeteria Plan'
Similar to a cafeteria where individuals select
their food of choice, employees may choose benefits of their choice. These
plans become more useful as diversity within workforces continues to grow. For
example, the benefit needs of young families may differ greatly from those of a
single person.
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