When can an employee change benefits in a cafeteria plan?

The correct answer is based on the principles governing cafeteria plans, particularly regarding the circumstances under which employees can make changes to their benefits. Employees can change their benefits in a cafeteria plan upon a qualifying event. A qualifying event can include situations such as marriage, divorce, the birth or adoption of a child, or loss of other health coverage. These events enable employees to adjust their benefit elections to align with their new personal circumstances.

Cafeteria plans are structured to allow flexibility for employees while adhering to certain regulations. Outside of these qualifying events, employees typically cannot change their elections until the next open enrollment period. This limitation ensures that the elections made by the employee are stable for a designated period, thus managing plan administration effectively.

In contrast, the other options do not align with how cafeteria plans function. Changing benefits at any time is not permitted without the occurrence of a specific qualifying event. Stating that employees can never change their benefits overlooks the designed flexibility in response to life changes. The option regarding filling out a new W-4 pertains to withholding allowances for income tax purposes and does not impact cafeteria plan elections. Understanding these nuances is essential for effectively managing benefits within a cafeteria plan.