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For purposes of the cafeteria plan nondiscrimination testing, the employer will use gross annual compensation which includes all taxable wages the employee receives from the employer, adds back any pre‐tax benefits the employee elects, as well as adds any taxable benefits the employee receives.
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Categories: Benefits in General, Compliance, Health Care in General | Tags: Cafeteria Plan , Nondiscrimination Testing , HCFSA , DCFSA , Flexible Spending Account , FSA , IRS , Annual compensation , Gross Compensation , W-2
The IRS requires that any organization that offers a cafeteria plan (or in other words, a pre-tax benefit plan) must perform various tests on the plan annually at the end of each plan year to determine if the plan is nondiscriminatory. In other words the plan cannot favor highly compensated employees.
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Categories: Benefits in General, Compliance | Tags: IRS , Nondiscrimination Testing , Key Employees , Highly Compensated Employees , Non-Highly Compensated Employees , FSA , Premium , Cafeteria Plan
The U.S. Chamber of Commerce issued a statement on March 16, 2017 supporting the use of cafeteria plans and requesting that the use of cafeteria plans be opened up for self-employed individuals in an effort to promote cafeteria plan use among small businesses.
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Categories: Benefits in General, Health Care in General | Tags: self-employed , sole proprietor , partner , subchapter s , sub s , s corporation , long-term care , longevity insurance , cafeteria plan
The IRS recently released an information letter addressing the treatment of cafeteria plan forfeitures when an employer ceases operations and the plan terminates. Specifically, the letter clarifies that Section 125 of the Internal Revenue Code does not require that unused cafeteria plan funds be paid to the U.S. Treasury in these circumstances. How unused funds are disposed of when a plan terminates depends on what the plan document provides and the facts and circumstances at the time.
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Categories: Benefits in General, Compliance | Tags: cafeteria plan , forfeitures , irs , information letter , health fsa , flexible spending account , Section 125
As calendar-year cafeteria plans have begun the 2017 plan year, employers might be wondering whether it is really too late to allow employees to make changes to or revoke their flexible spending account (FSA) elections, especially if it is prior to the first payroll of the new plan year.
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Categories: Benefits in General | Tags: fsa , flexible spending accounts , cafeteria plan , permitted election change

IRS Addresses Tax Treatment of Wellness Benefits

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Without the proper structure and plan design, cash rewards, including gym memberships, as well as premium reimbursements for participating in a wellness program may be considered taxable "wages" to employees.
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Categories: Compliance | Tags: IRS , wellness , wages , cash rewards , gym membership , HRA , Flexible Spending Account , Cafeteria Plan

Bill Would Eliminate Health FSA Forfeiture

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Congressman Charles Boustany introduced the Medical FSA Improvement Act of 2013 on April 18, 2013. The Bill would exempt Health FSAs from the cafeteria plan requirement that unused funds be forfeited to the employer.
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Categories: Benefits in General, Compliance | Tags: Cafeteria Plan
With open enrollment season upon us, we’ve received several questions regarding anticipatory elections. We also receive calls throughout the year on the related topic of election changes based on an anticipatory election that did not come to fruition.
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Categories: Benefits in General | Tags: Dependent Care FSA , Cafeteria Plan , Health Care FSA

Part Timers and the Dependent Care FSA

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Q. Employer: We’ve had a question come up a couple of times at our meetings this week regarding dependent care. One of the points on our slides is that the employee and spouse must either be working or full time students to be able to use the dependent care account. Are there a minimum number of hours that they need to be working?
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Categories: Benefits in General | Tags: Dependent Care FSA , Cafeteria Plan

Back to Basics: Cafeteria Plan Benefits

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Remember that a cafeteria plan is a plan that offers employees a choice between taxable benefits and qualified benefits. Only qualified nontaxable benefits can be offered under a cafeteria plan.
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Categories: Benefits in General | Tags: Cafeteria Plan
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