Employee Classifications/Non-Discrimination Testing

[Guest Carolynn]

An employer wants to give ER contributions to all employees. He further wants to give the higher paid "supervisors" an ER contribution based as a percentage of their salary. Therefore, the higher their salary, the higher the ER contribution. Is this allowed? He isn't planning on doing the same for the other classification of employees, they would all get one smaller lump sum.

Further details: there are no premiums in this cafeteria plan, only Dependent care and Med FSA.

Thanks for your help.

Carolynn

[Blinky the 3-eyed Fish]

Since when did employers start contributing to a cafeteria plan?

[SLuskin]

Employers can contribute to a Cafeteria Plan. First of all, it could be a flex credit plan. Second, many employers "seed" the fsa accounts to beef up participation and pass some of the discrimination tests.