Randall & Hurley, Inc.
Loren D. Stark Company
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|Legality of Contributing to Cafeteria Plan Without Reasonable Expectation of Its Use|
BenefitsLink Message Boards
Aug. 11, 2021
"Can someone point me towards any applicable rules prohibiting cafeteria plan contributions without a reasonable expectation of use? I feel sure this can't be allowed, but I'm struggling to find specifics. Obviously, the goal is to increase compensation on paper to allow for a larger profit sharing distribution annually. The non-ERISA plan funds would typically all be forfeited back to the business each year. You could argue that anyone could 'acquire' a dependent any given year, but I wouldn't try to argue that's a reasonable expectation. It doesn't seem to pass the sniff test, but I can't even find what sniff tests might apply."
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