TITLE 26. INTERNAL REVENUE CODE § 125. Cafeteria plans [Caution: For the inflation adjustment of certain items in this section, see the Revenue Procedure which appears as 26 USCS § 1 note.]., 26 USCS § 125
Summary
(a) In general. Except as provided in subsection (b), no amount shall be included in the gross income of a participant in a cafeteria plan solely because, under the plan, the participant may choose among the benefits of the plan.
(b) Exception for highly compensated participants and key employees.
(1) Highly compensated participants. In the case of a highly compensated participant, subsection (a) shall not apply to any benefit attributable to a plan year for which the plan discriminates in favor of—
(2) Key employees. In the case of a key employee (within the meaning of section 416(i)(1) [26 USCS § 416(i)(1)]), subsection (a) shall not apply to any benefit attributable to a plan for which the qualified benefits provided to key employees exceed 25 percent of the aggregate of such benefits provided for all employees under the plan. For purposes of the preceding ...