Do employers need to run non-discrimination tests every year for a POP plan?
YES - A cafeteria plan must meet certain nondiscrimination requirements to maintain its tax-advantaged features. A plan sponsor needs to assure that the cafeteria plan is not discriminatory in favor of key employees and/or highly-compensated employees. - It is important to run a preliminary test early in the new plan year. This will allow adjustments to be made early in the benefit year, with payroll adjusting contributions as needed to pass the Non-Discrimination testing. Employers should run a test at anytime during the plan year if they are increasing/decreasing their employee base. It's better to run too many tests than not enough tests.Find another question