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Cafeteria plan testing- IRS audits?


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Unless things have changed drastically from when I developed the cafeteria plan training material for ASPPA, there is no one at IRS who has responsibility for these audits.  The only time they seem to happen is when a major company (like, I believe, J.C. Penny) gets audited and then they have specialty auditors who look at everything.  I think it was Penny that got in trouble years ago for having an employee pre-tax health insurance (which would be a cafe plan) but never actually adopted the plan. Cost them a fortune as I remember.

Luke is right: where you see this as an issue is in the due diligence involved in M&A work more than anywhere else.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089

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  • david rigby changed the title to Cafeteria plan testing- IRS audits?

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