What is one of the overall tests required for Cafe Plans to meet nondiscrimination regulations?

The correct choice, which is the eligibility test, is crucial in evaluating whether a Cafeteria Plan complies with nondiscrimination regulations as outlined in IRS rules. This test assesses whether plan eligibility is extended fairly to all employees, ensuring that the plan does not disproportionately favor highly compensated employees over non-highly compensated employees.

In practice, the eligibility test helps to confirm that a significant portion of the employee population can participate in the plan, which is vital for maintaining compliance with nondiscrimination standards. Ensuring that all employees meet certain eligibility criteria prevents any unintentionally exclusionary practices and enhances the plan's overall integrity.

The participation test, although important, focuses on the number of employees who actually choose to participate in the Cafeteria Plan, which only indirectly reflects on discrimination in eligibility. The utilization test examines how employees use the benefits provided but does not address whether the plan's eligibility criteria are equitable. The benefits distribution test assesses how benefits are allocated among participants but is not a primary measure of whether the plan meets eligibility standards. Thus, the eligibility test stands out as a fundamental component in ensuring compliance with nondiscrimination requirements.