How aren't the 401k and FSA "discrimination" tests...well...discriminating?

[vi edit]

Long story short...if you make a decent paycheck and you save more money than other people then your 401k contributions and FSA accounts get gimped.

http://www.flexamerica.com/flex/discrimination.asp

Our company went to an "e-benefit" open enrollment this year where you filled out all of your benefits online. Supposedly somehwere in there they said that the child care FSA account was capped at $2,000 this year vs. $5,000 of previous years for "high income earners" which my wife falls into.

Of course they send out a letter after the enrollment period is up telling her this.

Basically, if you make too much money, and the rest of your coworkers chose not to save then by some cryptic "anti discrimination" test our employer is forced to cap how much she can put into her retirement plans and flex accounts.

Anti discriminating indeed!

 

[techs]

hmm. it sounds like they are trying to prevent companies from not "really" offering it to everyone but to make it only really accessible to a certain segment of employee.

i know that for health insurance they have rules that prevent super great company benefits for some and lesser benefit for everyone. sounds like a similiar situation.

has to do with not allowing people and/or companies to take advantage of a tax break unless they offer it to everyone.

 

[vi edit]

Yeh but 401k's and flex benefits are offered to any full time employee over the age of 21, and have been employed over 1000 work hours.