Overpaid Premium Reimbursement Account

[Guest parrot87]

I'm not GB but look at the bottom of page 71 of the attached document. Also refer back to page 61 for its relation to the situation discussed in this thread.

New_125_rules___full___2008.doc.pdf

[GBurns]

mjb

I do not see why it could be a problem or concern.

Most salary elections are for an annual amount broken down according to payroll frequency. I have only seen a few that emphasized the periodic payroll amount. So the emphasis is on the annual election amount. In fact, this seems to have been the root cause for the problem in the OP.

That being said the correction is only being done in order to correctly comply with the salary reduction agreement not to change it.

[Guest mjb]

mjb

I do not see why it could be a problem or concern.

Most salary elections are for an annual amount broken down according to payroll frequency. I have only seen a few that emphasized the periodic payroll amount. So the emphasis is on the annual election amount. In fact, this seems to have been the root cause for the problem in the OP.

That being said the correction is only being done in order to correctly comply with the salary reduction agreement not to change it.

bscspace:

Was the employee making pre tax contributions of $250 a month which the employer sent to the insurance company to cover the cost of the premium or was the employer reimbursing the employee on an after tax basis for $250 each month because the employer thought that was what the employee was paying?

[bcspace]

Was the employee making pre tax contributions of $250 a month which the employer sent to the insurance company to cover the cost of the premium

Yes, except the company pays the employee directly and the employee pays the premium. This is how it worked for me when I was employee with my Dad's (now deceased) company.

or was the employer reimbursing the employee on an after tax basis for $250 each month because the employer thought that was what the employee was paying?

The employee forgot to notify the company that she had switched insurance plans, dropping the premiums she paid down to $75 per month. With only two months left to go in the plan year, there was no way to make any type of accounting adjustment (analogous to a change of election) without the employee paying back the extra money. With this new premium she was paying, she had already been reimbursed above the maximum.

And this is indeed what we told the employee she had to do and from what I hear from our client, she's done it.