Dependent Care taken out pre-tax but no reimbursement involved?

[Guest javery]

We have a client who provides a daycare facility there. All employees who participate are required to have that daycare amount taken out of there paycheck to pay the provider. The clients question is can they take that money out of there employees paychecks under a pre-tax basis under the Section 125 plan. My understanding was that the Dependent Care Account is a reimbursement account. There would be no reimbursements involved.

[Joe Priselac]

The employer could in effect operate the dependent care plan like a POP plan- withhold the monies pre-tax and pay the daycare center. The plan document and SPD should describe this option to the potential participants.