New Cafeteria Plan Regulations
At the beginning of
August, the Internal Revenue Service released new Proposed
Regulations relating to Cafeteria Plans. These Proposed
Regulations have been long anticipated and are very
comprehensive. These new Proposed Regulations replace
previously Proposed Regulations issued in 1984 and 1989
which were never finalized but nevertheless were widely
accepted as governing Cafeteria Plans. Most of the major
provisions contained in the 1984 and 1989 Proposed
Regulations remain but the new Proposed Regulations also
formalize many other issues about which the IRS had provided
informal guidance during the intervening years. In addition
to expressly stating rules that were only previously implied
by the IRS, new rules were also needed to address changes to
the administration of Cafeteria Plan benefits that had
occurred over the last 20 years – such as the use of
electronic payment cards to fund Employee benefits.
The new Proposed Regulations provide for a
period of public comment and a scheduled public hearing
later this year. The intention is for the Proposed
Regulations to take effect for Plan Years beginning on or
after January 1, 2009 however, Employers are authorized to
rely on the rules effective immediately.
The purpose of
this overview is to break the new Proposed Regulations
into their major component parts and to provide an
explanation of the practical effect the rules have on
Cafeteria Plans and the Flexible Spending Arrangements
inside those plans. Unfortunately, the number of
provisions in the new Proposed Regulations makes it
impossible to keep this overview particularly brief. The
intention therefore, is to
present the rules in a manner that distinguishes each one so
that the reader can quickly locate the specific provision(s)
of interest to their situation.
Click here to review the Admin America's overview of
the new Proposed Regulations.
|
|
You will need to have
Adobe's Acrobat Reader, Version 6.0 or greater installed on your computer to view and
print the overview. Click on the Adobe "Get Acrobat
Reader" icon to the left to obtain the free Adobe Acrobat
Reader file.
|
|
