Flashcards in Nondiscrimination Testing Deck (7)
Loading flashcards...
1
What are the three general tests for cafeteria plans
1. An eligibility test
2. A contributions and benefits test
3. The key employee concentration test
2
The plan may not discriminate in favor of highly compensated individuals as to the ability to participate
Eligibility test
3
The plan must make contributions and benefits available on a nondiscriminatory basis, and the plan fails the test if highly compensated individuals select more nontaxable benefits than non highly compensated individuals select
Contributions and benefits test
4
The plan's key employee contributions cannot exceed 25% of the total contributions into the plan
The key employee concentration test
5
What is part one of the eligibility test
No employee be required to complete more than three years of employment as a condition of eligibility and all employees be subject to a uniform eligibility requirement
6
What is part two of the eligibility test
facts and circumstances determination. The cafeteria plan may not discriminate in favor of highly compensated individuals.
7