Does an employer contribution affect Section 129 limitation?

[billfgrady]

Under a dependent care assistance plan, participants are eligible to defer up to $5,000 per year. In addition, the employer makes a nonelective contribution for all participants. Does the nonelective contribution count towards the $5,000 limit? My guess is that if the nonelective contribution causes the amount to exceed the limitation of exclusion contained in Section 129(a)(2)(A), this would result in taxable income to the employee for any amounts contributed in excess of $5,000? However, I can't find any authority for this position.

[papogi]

If the employer’s contributions appear in box 10 of the employee’s W-2 (it should, otherwise it was taxable to the employee), then it will count toward the $5,000 limit. When the employee completes their tax return (Form 2441), any overage will be taxable to the employee.

Form 2441:

http://www.irs.gov/pub/irs-pdf/f2441.pdf

Form 2441 Instructions:

http://www.irs.gov/pub/irs-pdf/i2441.pdf