DC Administrator thinking of offering Cafe. Plans

[RestAssured]

Hi All.

I have been strictly DC admin for 15 years, and am now offering Cafeteria Plan administration. What have you all experienced in this regard? Am I crazy, or smart?!

Thanks!!

[QDROphile]

Do you understand the trust rules with respect to helath FSAs or will you be violating them like everyone else?

[RestAssured]

Well, qdrophile, I pride myself on being very compliant in ALL that I do! I do not run a shoddy firm, nor would I have been in business as long as I have if I did (I hope!!). I am immersed in learning Cafeteria Plan rules & regs right now, but do you have any ADVICE or something specific I should read?

[QDROphile]

DOL Technical Release No. 92-01, 57 Fed Reg 23272 and 58 Fed Reg 45359 (extension of position taken the Technical Release)

The administrative service provider cannot maintain an account from which benefits are paid, except on an immediate pass-through basis. The provider can be given check writing privileges on the employer's account.

[Lou S.]

Be prepared for a ton of menial processing.

[RestAssured]

DOL Technical Release No. 92-01, 57 Fed Reg 23272 and 58 Fed Reg 45359 (extension of position taken the Technical Release)

The administrative service provider cannot maintain an account from which benefits are paid, except on an immediate pass-through basis. The provider can be given check writing privileges on the employer's account.

I had pretty much already decided against offering a Trust, b/c of all those extra regs. My follow-up questions are: Will the employer be ok giving me access to his business checking? Do I need to get a Bond or something similar?

[QDROphile]

The access to the employer checking account is surprisingly rare given the ease of providing for compliance. Most arrangments simply violate the rules by having an account maintained by the provider. I don't know if the DOL non-enforcement policy extends to the ERISA bond (it probably would because the non-enforcement is based on the idea the the funds are employer assets in an employer account), but ERISA bonds are extremely inexpensive.

[Flyboyjohn]

Given that there are only 500,000 401k plans but over 6,000,000 health plans (almost all of which have related cafeteria plans) I think it's very smart to start gearing up for welfare benefit plan compliance services as the "next big thing". I gave a presentation on this topic at ASPPA and will be giving another at NIPA BMC next month in case you're interested in the handouts.

[RestAssured]

Given that there are only 500,000 401k plans but over 6,000,000 health plans (almost all of which have related cafeteria plans) I think it's very smart to start gearing up for welfare benefit plan compliance services as the "next big thing". I gave a presentation on this topic at ASPPA and will be giving another at NIPA BMC next month in case you're interested in the handouts.

I'd LOVE the handouts Flyboyjohn, thank you!!