Final year filing for cafeteria plans.

[Guest RAJ]

I have seen a number of references to filing a final form 5500 for pension plans with left over assets. Based on the 2001 filing instructions, I believe this would apply to left over funds in a Flexible Spending Account. Am I correct with this determination? Here is the situation:

I have a client that has canceled their calendar year plan as of 12/31/01. Though no further claims can be incurred for that plan year, the participants are still within the closing period to submit claims for that plan year and there are still funds available in the account. Would the 2001 filing be a final year filing or would they have to file a final year filing for 2002, after the account has a zero balance?

[Guest F1fan]

I assume you are asking this question for a Flexible Spending Account ("FSA") that is not filed as part of a larger welfare plan and there is no trust holding assets. If my assumptions are correct, then I would file 2001 as the final return. Unlike a pension plan, a fringe benefit plan (including an FSA) generally does not have a trust. Accordingly, neither the Form 5500 nor the Schedule F request detailed financial information regarding a flexible benefit plan, aside from the "cost" requested in line item 5 of Schedule F. If you opt to report for 2002, there doesn't appear to be anything to report. This is because: (1) no one would eligible to contribute in 2002, (2) no new amounts would be contributed by employees, (3) you do not report when amounts are actually reimbursed to employees under an FSA.

[Guest RAJ]

Tom,

Thanks for your feed back. You addressed some points I had not considered.