Able Corporation is a closely held company engaged in the manufacture and retail sales of automotive parts. Able maintains a qualified pension plan for its employees but is not currently offering nontaxable fringe benefits. You are a tax consultant for the company and you have been asked to prepare suggestions for the adoption of an employee fringe benefit plan. While talking to the company President, you find out the following information.

• Employees currently pay their own medical and health insurance premiums
• The company does not offer group life insurance
• The company would like to offer dependent care assistance under Sec. 129 for its employees

What advice would you give the company President about starting a fringe benefit program for the employees? What are some of the tax benefits to the company and the employees? Would a cafeteria plan be an option for this company?