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4 Basic Requirements to Qualify for a Simple Cafeteria Plan
The employer has met the requirements for being a simple cafeteria plan if these four basic requirements are satisfied:
Employer size. The employer (including certain affiliated entities) must have employed an average of 100 or fewer employees in either of the two preceding years. Special rules apply to new employers and certain growing employers with fewer than 200 employees.
Eligibility. In general, all employees with at least 1,000 hours of service during the preceding plan year (other than certain excludable employees) must be eligible to participate in the plan.
Benefits. Each employee who is eligible to participate must be able to elect any qualified benefit (other than cash) available under the plan (subject to any terms and conditions that apply to all participants).
Required employer contributions. Each employee who is not a key employee or highly compensated must receive a “true” employer contribution of at least: (1) two percent of the employee’s compensation for the plan year, or (2) the lesser of six percent of the employee’s compensation for the plan year or twice the employee’s salary reductions.
Don’t miss these Section 125 Plan recent blog posts:
Why Amend and Restate Section 125 Cafeteria Plan Documents? IRS Rulings since 1999 on one page.
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TASC’s Position on 2013-54 Individual Health Insurance Premium & Section 125 & HRA Plans
How Health Care Reform Affects Section 125 Premium Only Cafeteria Plans January 1 2015
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