We offer a DCRA under section 129 (not a cafeteria 125). Can we return any unused withholding to employees? I see where 125 will not allow this but I'm missing it under 129.

I would say no. I'll do some research to substantiate this answer.

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You need to define "withholding" in order to get an answer to this question. If you mean amounts withheld on a pre-tax basis from employees' pay, you are subject to the 125 rules. If you mean something else, please specify.

Thanks MSEARLE and JWK.
JWK you are correct that by withholding I mean withheld from employees pay.
Could you point me to where 129 and 125 combine on this issue?

[This message has been edited by CHRIS O'DANIEL (edited 01-27-2000).]

I guess I would turn the question around and ask on what basis, other than section 125, can an employee redirect compensation to the purchase of a nontaxable benefit without being taxed on the compensation under the constructive receipt rules?