What is Non-Discrimination Testing?

Tax regulations stipulate that cafeteria plans must avoid showing preferential treatment to highly compensated employees. That’s where Non-Discrimination Testing (NDT) comes into play. NDT is a series of mathematical evaluations applied to cafeteria plans. These assessments play a crucial role in ensuring that the plans remain fair and do not unduly favor individuals with higher compensation, including owners, officers, or their relatives. All employers who offer and welfare benefits to their employees are required by the IRS to conduct NDTs annually.

Who should perform Non-Discrimination Testing?

Every employer offering Section 125-compliant plans, which encompass any plans enabling employees to allocate income on a pre-tax basis into benefit accounts, such as those designed for insurance premiums within a Premium Only Plan (POP) and a Flexible Spending Account (FSA) must complete NDT testing.

NDT testing is a mandatory requirement for Health Reimbursement Arrangements (HRAs) and Self-Insured Medical Plans (SIMPs), even though they do not fall under the purview of Section 125.

Non-Discrimination Testing Options

BASIC

Non-Discrimination Testing
  • Eligibility Test

  • Concentration Test

  • Benefits Test

  • Dependent Care Average Benefits Test

  • Dependent Care Owner's Test

PREMIUM

Non-Discrimination Testing
  • Eligibility Test

  • Concentration Test

  • Benefits Test

  • Dependent Care Average Benefits Test

  • Dependent Care Owner's Test

  • Employer self-service options: Facilitate tests at your convenience.

  • Direct access to run tests

  • Complete NDT solution: Your all-in-one solution to staying compliant with NDT.

Download Your Non-Discrimination Testing Brochure

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