Non Discrimination Testing for public employer

[Guest taylorjeff]

I work with a school district that has a section 125 POP plan. The 125 administrator is asking them to complete a detailed xcell worksheet in order to do the compliance testing. I think its unnecessary as they meet the eligibility rule (ie. all employees are eligible - whoever participates in the benefit program) and since they are a public employer they do not have any key employees and will automatically pass the "benefits" test. The administrator insists they do the test anyway or they will not be in compliance with IRS (DOL?) regulations. Do the regs require all employers perform the test or simply be in compliance with the non-discrimination rules? Any comments / concerns?

[g8r]

My vote - You just have to be in compliance and be prepared to show that you comply should you get audited (which isn't likely to happen).