Dependent Care Assistance - Contributions included for plan comp purposes?

[401king]

Company has a 125 plan with FSA; they recently added a DCA component. I am told they are in separate buckets so the employees can take advantage of the contribution limits for each separately.

Their payroll provider says the DCA contributions should not be included in compensation when determining the salary deferral amount. I cannot find anything to support that. It's my first time dealing with DCA accounts; are all DCA Section 129? Are all Section 129 excluded for plan purposes (no reference in documents to 129)?

Example:

Salary: $105,000.00

DCA contributions: $5000.00

Deferral Election: 6%

Payroll company says deferral should be calculated net of DCA contributions, or $6,000.00 (instead of $6300, based on gross pay).

Thanks in advance!

[Lou S.]

What is the definition of compensation in the Plan document? That should tell you if you include of exclude for the basis for deferral.

[401king]

What is the definition of compensation in the Plan document? That should tell you if you include of exclude for the basis for deferral.

I guess what I'm most unsure of is: Does a section 129 DCA fall into the definition of a Cafeteria Plan? If so, I would know to include it as 125; if not, I would think to exclude it as our documents have no option to add back 129 contributions.

[QDROphile]

Dependent care can be funded though a cafeteria plan under section 125 and usually is. If the dependent care amount is elective and reduces the W-2 pay, it is run through a cafeteria plan (if done properly). The reduction would be considered a reduction under section 125.

[401king]

Thank you for clearing that up for me!