Cafeteria Plan Termination

[Guest motor]

I have a cafeteria plan terminating. Is there a law that states that the employee's have 15 days after a written notification of plan termination to submit reciepts, even if the date of service is after the plan termination date? There's nothing in the plan document that says this.

I know this is the case for a pension plan but....

Thanks

[mbozek]

Ther is no 204(H) equivalent for cafeteria plans but one would expect that the plan document would contain some language on payment of expenses incurred before notice of termination and submission of claims after termination of the plan. Q- Is the employer going to terminate the plan with a surplus in the employees acccount balances? Cafeteria plans are usually terminated at the end of the calendar year.

[Guest motor]

No, yes there are small balances that the employees are turning in receipts for. The company is terminating the plan because it was bought by anouther. The new owners of the company do not want to continue the plan. We decided to treat the plan termination the same as an employee termination. Which is giving the employees 30 days after the "termination" date to turn in receipts. Of coarse this can be up to the elected amount for the year, so the company will take a bit of a hit, as long as the employee's receipts are valid.

To my surprise,the plan document is VERY vauge.

Does this sound like the correct way of handling this?

Thanks,

[mbozek]

There are no IRS rules, guidlines, etc on mergers, acquisitions or terminations of 125 plans. IRS position is to do the right thing. U seem to be doing that.

[Guest motor]

Thanks,

I was hoping you would say that!