55% Average Benefits Test
What is the 55% Average Benefits Test?
Learn more about Dependent Care Assistance Programs (DCAPs) must satisfy the 55% Average Benefits Test, a utilization test that measures who is taking advantage of or using a benefit. The test ensures that highly-compensated employees (HCEs) do not participate disproportionately in relation to non-HCEs, and it is one of the more frequently failed tests. If the non-HCE average is not at least 55% of the HCE average, the HCEs are taxed on all DCAP benefits received.
Request our featured content. It is just one example of the insight and resources available to benefits professionals like you with a subscription to Thomson Reuters Checkpoint.
Take advantage of a FREE trial of Checkpoint to see for yourself. Our trials cover an assortment of topics including pension and benefits, estate planning, payroll, and much more.