Section 125 Plan Filing

[Guest moseelig]

I have a client who has a Section 125 Plan with Medical FSA only. For the 2004 plan year they hit exactly 100 participants. Do I have to file Form 5500? They did have a previous filing in 2001. Thanks for your input

[Lori Friedman]

In general, there's no longer a filing requirement.

You might want to read Notice 2002-24, which suspended the Form 5500, Schedule F filing requirement for "specified fringe benefit plans" described in I.R.C. Sec. 6039D(d)(1) (which include Sec. 125 plans). These plans had been filing Form 5500 for the sole purpose of remitting Schedule F; when Schedule F disappeared, there was no longer any reason for the plans to file Form 5500.

But, if ERISA requires a fringe benefit plan to file Form 5500 because it's also an welfare benefit plan, the IRS suspension doesn't apply.

Confusing enough? The IRS Notice provides a much better explanation than my own feeble attempt.

[JanetM]

When you say they hit 100, when was that? You count on first day of plan year. If it was 100 at you are a large plan. But having said that you can use the 80/120 rule to file as small plan.

[Lori Friedman]

The 80/120 small/large issue is irrelevant if there's no filing requirement for the plan.

[JanetM]

Opps, missed that part. Must be fixated on Friday quit time..... not paying close enough attention.

Thanks for pointing it out.

[401 Chaos]

Lori,

Could you help clarify your post for me. I understand that the IRS has repealed the separate filing requirement for fringe benefit plans, including 125 plans. However, if the company here has a medical flexible spending account / arrangement (FSA), don't they per se have an ERISA employee welfare benefit plan that would be required to file a Form 5500 (assuming they are above the threshold)? How could you have a medical FSA that would not be an ERISA welfare benefit plan? It seems to me that the IRS's actions mean that there would no longer be two Form 5500 requirements here--one for the 125 and one for the FSA (assuming they were maintained as separate plans); however, they would still have to do a Form 5500 filing for the FSA. Further, to the extent that the FSA is drafted as part of the regular cafeteria plan document rather than as a separate plan, I think that ultimately means that the single cafeteria plan / FSA would have to have a Form 5500 filing (again assuming they meet the threshold or don't fall within the 80/120 exception). Thanks.