Which of the following statements about cafeteria plans is (are) true?
I.Unspent flexible spending account balances are refunded to the employee, tax-free, at year-end.
II.Cafeteria plans enable employees to select benefits that meet their specific needs.

Question

Quizplus · Accepted Answer

Statement II is true. Cafeteria plans do allow employees to choose from a menu of benefits, usually including health insurance, dental insurance, life insurance, disability insurance, and retirement savings options. However, statement I is false. Unspent flexible spending account balances are forfeited by the employee, not refunded. Some employers may offer a limited grace period or a carryover option, but employees cannot receive a tax-free refund.

Which of the Following Statements About Cafeteria Plans Is (Are)