flex plan

[k man]

do you need to obtain a salary reduction agreement from an employee in order to take money out of there paycheck for health insurance costs (pre-tax)?

[GBurns]

Aside from the fact that the Proposed Regs for 125 say that it must be done. How else would you get permission? How would you verify that the amount was the mutually agreed amount?How would you know what to spend the money on?

[k man]

well all good points. could you give me the cite for the reg? i am referring to a premium conversion type account so the participant is seeking to spend the money on their health insurance coverage and the cost is the cost. there is no choice.

[Guest Laura Browne]

What about if the plan doc specifically allows automatic enrollment for insured benefits?

[GBurns]

First, there is no Plan Document that can preempt the law.

Second, enrollment (automatic or otherwise) does not mean that there is an employee contribution.

Third, while I do not remember seeing a requirement (under the IRC) that a salary reduction agreement be in writing, I remember a DOL requirement and state requirement that there be a written and signed document. Even if there was no regulatory requirement, it would be foolhardy to not have the election in writing.