Plan Document

[Guest jmg]

I recently took a position with a company. When I arrived I

ask the previous Benefts person for the Section 125 plan document. She handed me the plan document for the Flex Spending Account. I have asked the Accounting, Finance and HR

people and no one knows where the plan document for the section 125 plan, meanwhile pre-tax employee deductions are being deduction from employee paychecks.

I would appreciate any feedback from others that I have found themselves in this position. How do you break it to the management that we could be in alot of trouble if the IRS was ever to audit us ! How do we do this - do we adopt it retroactively?

Also, based on the research I have done: We need a master plan Section 125 document, a Premium only plan (to take the employee deductions pre-tax) and a Life Insurance plan document (since we are providing $50,000 in life insurance to employees on a tax free basis.

Any help is appreciated. Thank you very much.

[SLuskin]

Many companies use a master document where all elements of the plan are included and have the same plan number.

Others have, as you called it, a master document, and then sub documents for each part. Each has, then, a different plan number. Maybe read the FSA doc that you have and see if the other parts are not incorporated in there somewhere.

Also, how about your election form. Does it give you the opportunity to pretax premiums as well as participate in the spending accounts?

[Guest jmg]

Our election form for the pre-tax premiums is separate from the form to enroll in the FSA. I also checked the and the plan document for the FSA does not reference any other plans.

[mbozek]

Under IRS proposed reg 1.125-1 Q/A 2, a cafeteria plan is a separate written plan doucment under which each participant has the opportunity to select the benefits that he desires. The plan doucment may reference benefits established under other plans. See Q-3 for information required in the plan. An FSA usually has a provision allowing employees to make pre tax contributions.