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Non-Discrim Testing
Section 125 Cafeteria Plan Nondiscrimination Testing and Analysis
$595.00
price + options
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2000+ employees (PLEASE CALL)
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In order to qualify for tax-favored status, an Internal Revenue Code (IRC) Section 125 Cafeteria Plan must be non-discriminatory. ComplianceBug's non-discrimination testing and analysis services allows you to upload your plan data to test for compliance with IRC Section 125. Section 125 plans include:
Premium Only Plan accounts (employee contributions towards their share of benefits)
Healthcare Flexible Spending/Reimbursement Accounts (HFSA / HCRA)
Dependent Care Flexible Spending/Reimbursement Accounts (DFSA / DCRA)
Plans must not discriminate in favor of highly compensated employees and key employees with respect to eligibility, contributions, and benefits. In order to meet these compliance requirements, an annual test must be performed and the results documented for the Section 125 Cafeteria Plan. The results are subject to audit by the IRS. There are five distinct aspects of ComplianceBug's Cafeteria Plan non-discrimination testing:
Eligibility test - This test looks at who is asked to participate in the plan. In order to pass this test, the company must pass ONE of the following requirements:
70% of all employees participate
70% of all employees must be eligible to participate and of those 80% participate
There is no “discriminating” classification of employees
Contributions and benefits test - This test requires that all employees should receive the same amount of employer contributions and the same benefits must be available to all employees.
Key Employee Test - This test requires that HCEs/Key employees do not actually take (or utilize) a disproportionate amount of benefits under the plan.
Greater than 5% owners concentration test - This test requires that owners do not actually receive a disproportionate amount of benefits under the Dependent Care FSA.
55% average benefits test - This test determines that all non-HCE/key employees utilize at least 55% of the average benefits.
Fees include a $595.00 per test setup fee plus a per participant fee. To calculate your testing and analysis fees, select the total number of employees to be tested. Testing is being performed for the current plan year. Employee data is required if an employee is considered “non-excludable”.
DISCOUNTS AVAILABLE - ASK YOUR BROKER/CONSULTANT IF THEY ARE A COMPLIANCEBUG PARTNER.