Setting up new Dependent care FSA Plan

[Rai401k]

Our company would like to set up a Cafeteria Plan mid year 7/1/2005.

1. What would the effective date of the Plan be 1/1 or 7/1 and would the limits need to be reduced for the time the Plan not effective. i.e 2500 for dependant care instead of 5,000.

2. If a participant does not return his enrollment form on time can they do it the next entry date within the same year or must the wait until the next Plan year or 1/1/2006.

3. Can a participant elect to no longer put away money once an election has been made if they do not have a life cahnging event.

[SLuskin]

The effective date would be 7/1.

If you made it a short year, 7/1/05 to 12/31/05, we recommend that you prorate the amount.

If a full 12 month year, 7/1/05 to 6/30/06, then the amount can be $5000.

There can only be 1 enrollment date per employee. Anyone who doesn't elect is out until the next open enrollment.

No change can be made without a change of status. They are more liberal for daycare, but still have to be followed.

[QDROphile]

Why woudl you prorate? The summer months are heavy childcare months for school age children.