Employer contributions and their affect on Section 125 compliance.

[Guest RAJ]

If a company doesn't offer a self-insured Flexible Spending Account (under Code 105(h)), but wants to contribute toward an FSA under Section 125, what non-discrimination testing issues need to be addressed? Do both employee and employer contributions need to be factored in when calculating the 25% Key test? 55% Average benefits test? Help!:confused:

[SLuskin]

Yes, all employer and employee contributions to the flex accounts need to be taken into consideration for all the tests. I have a number of employers who contribute to the FSAs, specifically to make some of the tests pass.