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Flex Accounts


The Flexible Spending Account Administration Solution

Cafeteria Plan Non-discrimination testing

Neither Section 105(h) nor Section 125 provide for a specific size plan. Thus, any-sized self-insured plan, such as an FSA, is subject to Section 105(h) nondiscrimination testing, and any-sized cafeteria plan is subject to Section 125 nondiscrimination testing.  Fortunately, Fast-Flex Plus does virtually all of the discrimination testing work for your flexible spending plan.  The way it works is this:

Each employee is designated as a "Key", Highly-Compensated, 5% Owner, or Non-key employee on the employee record screen. Combinations are permitted. For example, a 5% Owner is a subset of both the key and HCE definitions. The definition of "key-type" employees can change from time to time, and the definition of a key employee is slightly different for the medical, dependent care, and 401k tests. An employee could conceivably be key in medical, but not in dependent care, etc. Consult IRC Sections 105, 414, and 416 for specifics.

With the click of a mouse, Fast-Flex Plus totals up the year-to-date salary deferrals of the various key groups and the non-key groups. (See Report Generator/Transaction Reports/Company Summary) Current ratios are computed at the end of this report to test for non-discrimination compliance.

This test can be run at any time to be certain that you are going to be in compliance at fiscal year end.

With the reports generated, the form 5500 can be filled-out in a matter of minutes. Instructions for the form 5500 can be downloaded from here.