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Updating Plan Documents By 12/31/14


coleboy
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The IRS released 2 new qualifying event provisions for Section 125 plans that are optional for employers to add into their existing plans. As a TPA can we take the approach that all plans in our book of business get this update or should we be giving clients the option to include these new provisions?

From our internal discussions it seems like this should have just been an addition to the qualifying event definitions rather than an optional provision to be amended on the plan.

On another note, does anyone know if the deadline to update the Sect. 125 documents will be extended? Our document provider is not expected to release the updated documents until the end of Oct. during our busiest time of year.

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The release says that the amendment deadline is the last day of the plan year that begins in 2015 so you've got until 12/31/15 at the earliest to make the formal amendment.

The more important question is whether it's advisable to recommend the change to your entire book of business. What if letting someone out of the large employer plan enables the employee to get subsidized Marketplace coverage and causes the employer exposure to the 4980H(b) penalty?

I think this could happen for example when the large employer is using the W-2 Box 1 affordability method, the employee's income drops, employer coverage becomes unaffordable and the employee gets a subsidy.

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I suggest that you approach all plans and recommend the change.

Edit: Check the deadline date, I think that Flyboyjohn is correct with 12/31/15.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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If you recommend a provision to your client and your client responds with an e-mail that says yes (and implement it as soon as possible), isn't that exchange of writings an amendment of the client's written plan?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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I doubt that it would unless the plan has a clause incorporating and adopting such exchanges.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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