Discrimination in Employee Benefit Plans
IRC Section 125(h)--Safe Harbor Test

Background Reading

IRC Section 125 provides that the Plan (a) is non-discriminatory if it meets the eligibility test by passing either the 70% or the 70/80% eligibility test (where eligibility is measured in terms of having the opportunity to participate and not actually doing so) and (b) isnon-discriminatory if meets the benefits and contributions test by showing that there is not only an absence of per se discrimination but that there is no possibility of there being any discrimination by groups or classes of employees.  Moreover, this Benefits and Contributions safe harbor test does apply to FSA and POP but not to the Full-Flex Cafeteria.