All employees are part time: effect of leave on 125 (change of employm

[Guest Craig Kunz]

I have a dentist client who has 5 part time employees. Dr. is a 100% shareholder of an S Corporation. He would like to provide a 125 plan with a FSA and DCAP option. The question was posed to me, that since the doctor will occassionally take a month or month and a half off each year to travel, and since the employees are all part time. How would they be able to continue wage reduction without income.

I want to make sure that this would qualify as a change in employment status. Therefore, my plan document would say something to the effect that, in the event the doctor takes an extended vacation of a week or more, the employees are deemed to be out of work, and thus a change of employment status has occured, whereby a cease of wage reduction can take place until the time that their employment begins again.

p.s. there are no HCE and no Key Employees

Would this be ok?????