Dependent Care Reimbursement Outside of Cafeteria Plan

[Guest kredlin]

Can an employer maintain a section 129 dependent care reimbursement plan outside of a cafeteria plan? I believe they can, thus allowing self-employed individuals (partners) to participate, but I can't find any guidance.

[oriecat]

I could be way off here, so take these thoughts with the knowledge that I might not know what I'm talking about...

Sec 129 provides an exclusion from income of the amounts paid by the employER for dependent care assistance. Sec 125 then comes in and takes the employEE amounts and makes them employER amounts through the choice of cash or benefits. So I do not see how you could do a plan without section 125 unless the employER wants to provide these benefits themselves.

[Guest lschaab]

Section 129 is the part of the code that governs dependent/child care benefits (just like 79 governs gtl benefits), Section 125 is the vehicle for avoiding taxation on certain benefits (whether employer or employee funded). So without a Sec. 125 plan what possible benefit could the partners realize? Add Sec. 125 into the mix then you run into the 'wall' because depending on corporate structure, your partners/self-employed persons may (a) be ineligible to participate or (b) cause the plan to be discriminatory. Don't forget eligibility too.