flex credits contributed to 401(k)

[Guest penfirn]

What code section, reg etc., authorizes these contributions and describes how they are treated for testing and other purposes?

[Guest Fred Farkash]

I think you're referring to a cafeteria plan credit that can be used for 401(k) or after-tax contributions. You may want to start your search by looking at Section 125 of the IRC.

Note that for the contributions to be treated as pretax contributions under 401k, the Cafeteria plan would have to allow the employees to opt to take their credits as cash.

See Q&A in 9/98 Employee Benefit Plan Review