The IRS made sweeping changes to IRS Section 125 Cafeteria Plan regulations on August 6, 2007 set to take effect January 1, 2009. Employers utilizing Section 125 Premium Only Plans, Health Flexible Spending Accounts and Dependent Care Assistance Plans have to update their Plan Documents or face potential penalties and the possibility of having their Plan disallowed back to the date of infraction. Core Documents at www.CoreDocuments.com has an affordable solution.
Bradenton, FL (PRWEB) January 9, 2009 -- Gene Ennis, the President of Core Documents, Inc., in Bradenton, Florida is warning all employers in the United States to update their Section 125 Cafeteria Plan Documents NOW. The IRS deadline for amending out-of-date Section 125 Plans was January 1, 2009.
It has come to our attention that some of the largest insurance carriers in the country including the major ancillary benefit carriers have missed this important January 1, 2009 deadline and left millions of small employers at risk of losing important insurance premium, medical expense and dependent care expense tax deductions.
Ancillary benefit carriers use Section 125 Cafeteria Plan Documents as a way to open doors to small employer groups to write supplemental insurance plans such as cancer insurance, accident insurance, intensive care, disability and life insurance. The problem with using important IRS and Department of Labor Plan Documents as bait to open doors to sell insurance is the lack of follow up by the Agent when those Plan Documents need to be updated for important changes in the Code.
Now more than ever before the IRS Code reads, "A Plan that ______________, is not a Cafeteria Plan." You can fill in the blank with anything from "allow owners to participate" to "require mandatory participation for only one benefit".
What are the consequences? The major consequence could be having the Cafeteria Plan disallowed back to the date of the infraction where the employer would be liable for all unpaid back taxes plus interest and penalties.
Rumors abound throughout the country that the IRS regulations are simply "Proposed" and have not been "Adopted" and therefore are not important. Don't fall victim to this misinformation. This is not true. A simple reading of the first paragraph of the new REG-142695-05 Code says, "This document contains new proposed regulations providing guidance on cafeteria plans. This document also withdraws the notices of proposed rulemaking relating to cafeteria plans under Section 125 that were published on May 7, 1984, December 31, 1984, March 7, 1989, November 7, 1997 and March 23, 2000. In general, these proposed regulations would affect employers that sponsor a cafeteria plan, employees that participate in a cafeteria plan, and third-party cafeteria plan administrators." So, technically this set of "proposed" regulations is replacing "proposed" regulations and rulemaking all the way back to 1984.
Core Documents has meticulously updated all their Section 125 plan documents to meet the new requirements and suggests that every employer in the country amend their existing Plan Documents regardless of who originally wrote them. If you have a plan document from an insurance carrier or a TPA that has failed to update it by January 1, 2009, you should go to www.CoreDocuments.com immediately, or call 1-888-755-3373.
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