SPD's for Section 125

[Guest Dick Boever]

As I understand it, a sponsor is not required to have an SPD for a Section 125 Plan, as it is not an ERISA plan. The underlying ERISA plan could require an SPD, ie. the health insurance plan whose premiums are being paid pre-tax.

If this is correct and I am pretty sure it is, why are most of the SPD's given to participants in Section 125 plans so long and complicated. They all seem to try and include the information required of ERISA plans. It would seem more of an effort would be made to keep the SPD simple and understandable, since there is no required language.

I would appreciate your thoughts.

[Guest S Pearce]

A Section 125 Plan does require a Plan Document, SPD and filing of a form 5500 annually.

[KJohnson]

A POP 125 is not, in itself, a Plan covered by ERISA. The 5500 requirement is a Code requirement (6039D) and not an ERISA requirement. Similarly, the Plan document is a Code requirement and not an ERISA requirement.

Therefore, I know of no SPD requirement for a 125 POP. Of course since the underlying benefit benefti is an ERISA benefit, and since many 125 Plans have Medical FSAs, I think there has been a tendency to give full SPD treatment. I know my practice is, in the statement of ERISA rights to state that the 125 Plan is not an ERISA Plan but that certain benefits offered under the Plan may be covered and then set forth the standard language.

[SLuskin]

The one we use is long and complicated because an attorney wrote it.