Flexible Spending Account Administration Solution
Eligibility to Participate in a Cafeteria Plan
Q. Who can participate in a Flexible Spending Plan?
A. Any employer can sponsor a cafeteria plan for its employees, regardless of size.
Eligible employers include corporations ("Subchapter S" or "Subchapter C"), partnerships, non-profit organizations,
government entities, limited liability companies (LLC), limited partnerships (LLP), and sole proprietorships. Businesses that
are under a controlled group may also sponsor a single plan for all of their employees.
Only employees of the sponsoring employer can participate in a cafeteria plan. Examples of individuals
that are NOT eligible to participate in a cafeteria plan include:
Self-employed individuals (but they can sponsor
Partners in a partnership (but the partnership can sponsor a plan)
A more than 2% shareholder
in a "Subchapter S" corporation