Starting a cafeteria plan

[Guest Justice]

I direct a small (4 employee) non-profit and am interested in starting a cafeteria plan. Do you have any suggestions for starting from ground-zero? Thanks.

[Lisa Hand]

The best place to start is to talk to someone who specilizes in these plans. They should be able to discuss your options at no cost. The Yellow Pages on BenefitsLink lists a number of cafeteria plan service providers. Especially for a small non-profit, there is no sense in recreating the wheel.

[SLuskin]

We have been administering cafeteria plans for "mini-employers" for about a year (over 9 years for larger employers). It works the same for non-profit organizations as for the "for profit ones". Generally, an employer would expect to generate at least enough in FICA savings to "pay for" the administrative expenses of the plan. With less than 10 employees, that doesn't happen. Often, with only 4 employees it is hard to pass the discriminiation tests. However, for non-profts, there are no shareholders, so testing becomes easier. It might work, depending upon what benefits you wanted to offer to your workforce.