Simple Cafeteria Plan

A simple cafeteria plan is a type of cafeteria plan that allows small employers (those with 100 or fewer employees) to bypass annual nondiscrimination testing. Here are the key points about simple cafeteria plans:

  • Employer Size: To qualify for a simple cafeteria plan, the employer must have 100 or fewer employees during either of the previous two years.

  • Employee Eligibility and Participation: Generally, all employees with at least 1,000 hours of service during the preceding plan year must be allowed to participate in the simple cafeteria plan.

  • Employer Contributions: Employers can contribute to the plan, but there are specific rules regarding the amount and type of contributions.

In summary, a simple cafeteria plan provides a streamlined way for small businesses to offer benefits without the burden of annual nondiscrimination testing.

If you’re a small employer considering benefits for your employees, exploring simple cafeteria plans could be beneficial.