Which of the following best describes a cafeteria plan under Section 125 of the IRC?

A cafeteria plan under Section 125 of the Internal Revenue Code allows employees to choose from a variety of pre-tax benefits, which can include both taxable and nontaxable options. This flexible benefits program enables employees to tailor their benefit packages to suit their personal needs and circumstances, thereby increasing employee satisfaction and potentially enhancing overall workplace morale.

The key aspect of a cafeteria plan is the ability for employees to select benefits from a menu, thus the name "cafeteria." This selection process can include items such as health insurance, dental coverage, and dependent care assistance, allowing employees to choose what fits best for them rather than having a one-size-fits-all approach.

The other options describe plans that do not align with the core principle of how cafeteria plans operate. Expense reimbursement plans typically relate to the reimbursement of specific expenses incurred by employees rather than the selection of varied benefits. Tax-qualified retirement plans are generally defined benefit or defined contribution plans that focus on retirement savings rather than offering a selection of different benefits. Lastly, the concept of setting aside pretax dollars for a qualified retirement account until a specific age pertains more to retirement savings plans rather than the flexible choices presented in a cafeteria plan.