section 125 cafeteria plan

[Guest ascotahuff]

If an employee elected pre-tax deductions and was terminated, when rehired, is there a waiting period before he is then eligible for pre-tax deductions in the future? This relates to health insurance dedutions.

[Guest b2kates]

Normally, it is tied to when the employee is covered by the medical plan. Is the participation immediate on rehire?

[Guest MSMA]

Now - I am not absolutely sure on this but... I seem to recall my Thompson's book stating that if the rehire is within the SAME plan year, the employee can not utilize the 125 until the next plan year. Does this sound right to anyone else?

[Moe Howard]

What is a "Thompson book" ?

You mean there is a book about this stuff ?

Who sells them ?

[Jbentz]

It is Thompson Publishing Group and they are a great source of information. I have only used their COB guide, but it is the best. Thier website is www.thompson.com.

[Greg Judd]

Originally posted by ascotahuff

If an employee elected pre-tax deductions and was terminated, when rehired, is there a waiting period before he is then eligible for pre-tax deductions in the future?  This relates to health insurance dedutions.

b2kates has it, basically.

pre-tax contributions are simply a tax-favored way for employees to pay their pre-determined share of health plan costs. Any constraints on the tax status of contributions are usually aimed at preventing 'unfair' tax deferral/avoidance. If the person's eligibility for pretax contributions dovetails with their eligibility for medical coverage, should be no waiting period issues for reactivating pretax contributions.

MSMA, sounds like you're thinking of healthcare and/or dependent care spending accounts, which are often conceptually lumped with pretax contribution plans and are governed by overlapping federal tax statutes (tho others may be involved than Section 125). Still, the statutory limits on plan re-entry may be narrower than your example suggests (tho as a plan administrator you may impose limits like that in your example).

[SLuskin]

If the participant is rehired within 30 days, he steps back into his original election.

If the participant is rehired after 30 days, then the employer has several choices, and they should be stated in the document.