Compensation-fringe benefit exclusion

[Guest Salem]

A 401(k)/PS plan excludes fringe benefits from compensation in the adoption agreement. Employer mentioned that some of the wages reported for employees includes cash in lieu of electing the employer's health insurance (they are covered by spouses' plans). Amounts vary, but are up to $9,000. Deferrals have been withheld from these amounts.

My review of the IRS website and EOB indicate that any pay other than basic compensation for the job (one's salary) is considered a fringe benefit, though I haven't found anything specific for this cash in lieu of insurance. Does anyone have anything specific regarding these types of payments as a fringe benefit?

thank you.

[QDROphile]

Aren't you describing a section 125 plan? And don't we suspect that the employer is not complying with the law by having a written plan document and following appropriate procedures under section 125?

[Guest Salem]

I don't believe so, since the payments are made through payroll and taxed.

[QDROphile]

So it would be under a cafeteria plan for an employee who chose the cash instead of the health benefit.

[KED]

No, I don't think the IRS considers anything other than base salary a fringe benefit. For example, I don't think you can exclude a cash bonus under the "fringe benefit" exclusion.