Home > Resources > Compliance Resources > Compliance Quarterly > February 2009 Compliance Quarterly > Update on Proposed Cafeteria Plan Regulations

Update on Proposed Cafeteria Plan Regulations

As we shared with you in the November 4th edition of Compliance Quarterly, in August 2007, the IRS & Treasury Department issued “new proposed” Section 125 regulations that pertain to cafeteria plans and, when passed, will result in significant changes to the way cafeteria plans are established and administered.

To whom do the proposed regulations apply to?
Any employer who maintains, or is considering maintaining, a Section 125 plan.

What steps should employers be taking in anticipation of the final regulations?
Many employers and plan sponsors have been waiting for the final regulations to be published before they take on the additional administrative obligations that will be required under these regulations. Meritain Health recommends if you are an employer group that offers a Section 125 plan or if you are thinking of offering a Section 125, you should carefully review our previous article on this matter and start to think about how you are going to comply with the final regulations, including the need for a written plan document.

When do the proposed regulations go into effect?
The proposed regulations had an effective date of the first plan year starting on or after January 1, 2009. However, the IRS has informally indicated that we will not see final regulations until sometime this year. Since the regulations have not been finalized, they are not yet enforceable. Once the final regulations are published, they will include a final compliance date, but benefit experts do not believe compliance will be required any sooner than the first day of the plan year on or after January 1, 2010.

How do I establish a written plan document?
If you currently have a cafeteria plan and do not have a written plan document, Meritain Health can prepare one for you at our standard fee. Contact your Client Relationship Manager today for further information on how to begin this process.