Flexible spending accounts

[Guest DorisR]

I have a client who is a Subchapter S Corporation. There are two shareholders, both of whom draw a salary. They would like to have a flexible spending plan so that they can pay for out of pocket childcare and medical expenses with pretax dollars. There will eventually be nonowner employers. But for the present, can these two shareholder employees, both of whom own more that 2% of the corporation, have flexible spending accounts without running afoul of discrimination rules and subchapter S rules?

[Guest Paul]

2% shareholders can not participate in a cafeteria plans.