Jump to content

POP Plans


Guest pensiondoc

Recommended Posts

Guest pensiondoc

I'm a TPA and have not gotten involved with 125s yet. I have a life insurance agent who came to me recently with a proposal to prepare docs, SPDs and 5500s for premium only plans. I thought there was testing involved with these plans, but the fellow says no; and he says he "checked it out with an insurance company".

If there are tests involved, what are they and where can I get more info on how to do them ?

Thanks, Steve

Link to comment
Share on other sites

STEVE:

SECTION 125 (f) SAYS THAT A PLAN MAY NOT PROVIDE "KEY EMPLOYEES" ( AS DEFINED IN SECTION 416(i) (1) OF THE IRS CODE ) WITH BENEFITS UNDER A SECTION 125 PLAN IN EXCESS OF 25% OF THE AGGREGATE OF BENFITS PROVIDED TO ALL EMPLOYEES UNDER THE PLAN.

THIS WOULD BE THE ONLY TESTING THAT I KNOW ABOUT. ASK YOUR INSURANCE REP. ABOUT THIS.

[This message has been edited by KIP KRAUS (edited 09-28-98).]

Link to comment
Share on other sites

Additionally, 125 Plans are required to be non-discriminatory and must pass that test. They must have a written document which is adopted by the company and are required to file the annual Form 5500. You might consider working with a TPA who specializes in these plans to insure compliance.(BenefitsLink yellow pages is a good place to look) Many insurance agents and companies think POP plans are "no-brainers" and an easy way to sell their products, however; the IRS will fine you just as fast for non-complaince with a POP as with a full Flexible benefits plan. Often the sponsoring employer (who is responsible for compliance)finds this out the hard way.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...