{"id":1743,"date":"2021-03-22T21:00:50","date_gmt":"2021-03-22T15:30:50","guid":{"rendered":"https:\/\/www.complianceprime.com\/blog\/?p=1743"},"modified":"2024-05-10T10:55:06","modified_gmt":"2024-05-10T05:25:06","slug":"the-basic-requirements-to-qualify-for-a-simple-cafeteria-plan","status":"publish","type":"post","link":"https:\/\/www.complianceprime.com\/blog\/2021\/03\/22\/the-basic-requirements-to-qualify-for-a-simple-cafeteria-plan\/","title":{"rendered":"The Basic Requirements to Qualify for a SIMPLE Cafeteria Plan"},"content":{"rendered":"

A SIMPLE cafeteria plan is generally available to smaller businesses with 100 or fewer employees who are not all owners. It is a savings account that employees can use to spend their pre-tax earnings on qualifying health and dependent-care expenses. It is a very simple plan and can be a great alternative to a traditional 401k if your company doesn’t offer one.<\/span><\/p>\n

Related Webinars<\/div>
\"Speaker\"
Cybersecurity in the Age of AI: How to Protect Your Business From Emerging Threats<\/div>
<\/div>
<\/path><\/feDropShadow><\/filter><\/feDropShadow><\/filter><\/svg><\/div>
May 27th 2026 @ 01:00 PM ET<\/div>
<\/div><\/div>
Speaker: <\/strong>Burton Kelso, The Technology Expert<\/div>
Learn More<\/div><\/div>
\"Speaker\"
Final Paycheck Compliance in 2026: Avoid Costly Termination Mistakes<\/div>
<\/div>
<\/path><\/feDropShadow><\/filter><\/feDropShadow><\/filter><\/svg><\/div>
May 28th 2026 @ 01:00 PM ET<\/div>
<\/div><\/div>
Speaker: <\/strong>Vicki M. Lambert, CPP<\/div>
Learn More<\/div><\/div>
\"Speaker\"
Handling Harassment & Discrimination Claims: A Step-by-Step HR Guide<\/div>
<\/div>
<\/path><\/feDropShadow><\/filter><\/feDropShadow><\/filter><\/svg><\/div>
Jun 4th 2026 @ 01:00 PM ET<\/div>
<\/div><\/div>
Speaker: <\/strong>Melissa Fleischer, Esq<\/div>
Learn More<\/div><\/div><\/div><\/div>\n

Before moving ahead, let us see what a SIMPLE cafeteria plan is?<\/span><\/p>\n

SIMPLE Cafeteria Plan<\/span><\/h2>\n

The simple cafeteria plan is an alternative to the more complicated cafeteria plan. It is a type of cafeteria plan that is provided by an employer to employees. A cafeteria plan is an employee benefit that allows an employee to choose from a variety of benefits or services to determine the amount of money that they will contribute towards their health insurance coverage. The employee can choose to opt-out of health insurance coverage if they so choose.<\/span><\/p>\n

If you are not familiar with the concept of a cafeteria plan, in a nutshell, the cafeteria plan option is an alternative to a Flexible Spending Account (FSA) that allows you to control the amount of money you spend on health care in a given year. It is a tax-free account that helps you save money for future health care expenses (such as copayments, coinsurance, deductibles, long-term care insurance, etc.) through pre-tax contributions.<\/span><\/p>\n

A cafeteria plan is a method used by an employer to offer its employees a choice of benefits in lieu of receiving cash compensation. Typically, employees are given a certain amount of money from their paycheck on a pre-tax basis to spend on approved benefits. These benefits are typically in the form of goods or services.<\/span><\/p>\n

The Basic Requirements to Qualify for a Simple Cafeteria Plan<\/span><\/h2>\n

The basic four requirements to qualify a simple cafeteria plan are:<\/span><\/p>\n

Employer size:<\/b> The organization must have hired an average of a hundred or fewer workers in either of the two previous years. Specific rules apply to new organizations and certain growing organizations with fewer than two hundred workers.<\/span><\/p>\n

Eligibility:<\/b> In general, all workers with at least a thousand hours of assistance during the previous plan year must be qualified to participate in the plan.<\/span><\/p>\n

Advantages:<\/b> Each worker who is eligible to participate in the plan must be able to choose any qualified benefit available under the plan.<\/span><\/p>\n

Required organization contributions:<\/b> Each worker who is not a key worker or highly paid must get a true employer contribution of at least:\u00a0<\/span><\/p>\n

    \n
  1. 2% of the worker\u2019s compensation for the program year, or\u00a0<\/span><\/li>\n
  2. the lesser of 6% of the worker\u2019s compensation for the program year or twice the worker\u2019s salary reductions.<\/span><\/li>\n<\/ol>\n

    Final Words<\/span><\/h2>\n

    Simple Cafeteria Plans is a little more complicated than the name suggests, but the qualified organizations that prefer to take benefit of this new Cafeteria Plan will evade the burden of ongoing non-discrimination testing.<\/span><\/p>\n

    To know more about the SIMPLE cafeteria plan, attend the Compliance Prime webinar. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    A SIMPLE cafeteria plan is generally available to smaller businesses with 100 or fewer employees who are not all owners. It is a savings account that employees can use to…<\/p>\n","protected":false},"author":4,"featured_media":1744,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[43],"tags":[],"class_list":["post-1743","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-construction-housing"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts\/1743","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/comments?post=1743"}],"version-history":[{"count":1,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts\/1743\/revisions"}],"predecessor-version":[{"id":5177,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts\/1743\/revisions\/5177"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/media\/1744"}],"wp:attachment":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/media?parent=1743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/categories?post=1743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/tags?post=1743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}