Section 125-Vacation Buy

[Guest kgemind]

Our Plan offers Medical & Dependent Care reimbursement accounts that must be actively elected during annual enrollment. We also offer a pre-tax Vacation Buy Benefit. But this election carries over from year to year, unless the employee actively election a different tier (no coverage or additional days). Does Section 125 cover this benefit? I assume it does since it is pre-tax. Should we be requiring employees to actively elect this benefit each year? In administering the vakay buy, employees must use all regular paid time-off )PTO) first, then vakay buy in the same year as the election. Thus, employees who buy vacation days cannot roll over PTO. Can you provide a good reference for your answer. Thanks!

[papogi]

See 125-1 Q-7 and 125-2 Q-5© for guidance. Elective vacation days (days for which there is a cash option) cannot carry over to the next year, or deferred compensation issues are raised. The elections concerning vacation days should occur each year.