Plan for Owner Only

[nancy]

Can a c-corporation with only one employee (the owner) establish a flexible spending account or will the plan automatically violate the concentration test? Is there an exception when there are no non-key or nhces?

[Guest Quicksilver]

This is the prefect situation for a section 105 corp reimbursement plan. All Medical expenses can be reimbursed by the corporation and not considered as income to the employee owner

[Joe Priselac]

Nancy,

To answer your question directly, the one person c-corporation could not have a IRC Section 125 cafeteria plan because it could not pass the key person concentration test. The Section 105 plan is an excellent alternative.

[Jacmo]

MERPs and HRAs fall into the section 105 category.