25% Concentration Test

[Guest Joe Vasko]

What type of ER paid benefits can be included in the 25% concentration test?

Thanks, Joe

[papogi]

The Key Employee Concentration Test only applies to those amounts being funneled through the 125 plan, and applies to all non-taxable benefits (including FSA's). Amounts being run through the 125 plan include (1) any pre-tax payroll deductions, and (2) any employee-directed flex credits provided by the employer. Basically, 125 dollars are those for which there was a cash option. Any completely employer-paid benefits for which the employee had no cash option do not need to be included in the test.