Benefit elections: I know the exceptions to the rule, but where is the

[Guest Looser]

This should be the easiest question all day – I just can’t seem to find the answer. I know that the final treasury regs clarify when a cafeteria plan may permit an employee to change his/her elections during the plan year. I have the cite & regs – no problem there - I am clear on the exception to the rule.

I also know that there is a law or reg that says you must make your elections prior to the start of the plan year, but for the life of me I can’t find the rule! Could anyone direct me to the proper cite? Thank you!

[papogi]

It's in 1.125-1 (Q-15). The first paragraph of the IRS answer states it this way:

Generally, in order for participants to avoid constructive receipt with respect to taxable benefits offered under a cafeteria plan, the taxable benefits must at no time be currently available to the participants. Thus, a cafeteria plan should require participants to elect the specific benefits that they will receive before the taxable benefits become currently available. A benefit will not be treated as currently available as of the time of the election if the election specifies the future period for which the benefit will be provided and the election is made before the beginning of this period.

[Guest Looser]

I cannot thank you enough! :-)

[Guest Looser]

I spoke too soon. If I understand you correctly, you cite 26 CFR 1.125-1. When I went to the CFR, there was nothing between Sections 1.123-1 and 1.125-2T. Did I misunderstand you, or am I just hopeless?

[papogi]

The reg still exists, but I agree you can't get it at Archives and Records. 1.125-1 was last amended on January 10, 2001, but the amendment was to question 8. Since the regulation was originally published in 1984, no revision has ever been made to question 15, the one which deals with elections needing to be made before the plan year. I don't know where else to tell you to look, but the regulation still applies.

Does someone else know where to look for this on-line?

[GBurns]

Because 1.125-1 and 1.125-2 are "merely" Proposed Treasury Regulations they are not generally available and not includable in the CFR, apparently because of the lack of legal effect, but you can find them on Tax Analysts or any of the tax research subsription services.

MHM fortunately also provides them through its subsidiary 125plan.com at this link:

http://www.125plan.com/FlexLinks.htm

[Guest Looser]

I think I was not meant to read this! I went to the cite, and can access the document above what I need (Section 125) and below what I need (1.125-2 ) but the link to what I actually want to see (1.125-1) gives me a 404 error! Any other options out there?

[Lisa Hand]

There are several organizations which publish legal guides on cafeteria plans which include all regs, proposed regs ect. Email me and I can let you know about the main one I subscribe to and how to contact them.