Reply to Discrimination test for dependent care FSA?

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Reply to "Discrimination test for dependent care FSA?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]It is unfortunate but normal audit that should happen ever year. It happens if the % of lower income folks contributiing is significantly less than high income folks contributing. The plan is discriminating in favor of highly comped folks. The same thing can happen with 401ks, but 401ks have the option of a safe harbor so you don't hear about it as much.

Your husband will most likely be affected by this every year going forward. If you make less than 115k and have access to a dependent care FSA, you should contribute for the family.[/quote]

Thanks for this. This is how they are now explaining it. I do have access to the FSA and make less than the 115k, so I'll set it up when my enrollment period comes around. I just wish they had been on top of this so he could have contributed more toward his retirement instead. [/quote]

They may have just been impacted for the first time last year. Going forward those folks should be warned up front. At my company it took us 8 years before we started filling our dependent care testing.
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