prohibited transaction in cafeteria plan?

[Guest mjn]

A school system has a cafeteria plan and has allowed participants to be reimbursed for life insurance premiums. The school system already provides a $50,000 life insurance policy for each employee, so the premium for the additional life insurance policy should be taxable to the participant. It is my understanding that this situation has existed prior to this year. How can this be corrected?

Thanks.

[Guest b2kates]

issue corrected w-2s, but may still be penalized for late filing. Also remember that the reimbursement is also subject to FICA

[david rigby]

The relationship of the original questioner and the school system is unclear. IANAL, but it seems likely the school system will want to get its own counsel to provide advice (which may be exactly the same as from b2kates).