premium conversion plan with less then 100 employees

[Guest jigpsu100]

Are employers who maintain a premium-only plan (125 plan) with fewer than 100 employees required to file a Form 5500? I don't know what the status of this filing is. Thanks.

[Lori Friedman]

A Sec. 125 POP shouldn't have a Form 5500 filing requirement, regardless of the number of participants.

You might want to read Notice 2002-24, which suspended the Form 5500, Schedule F filing requirement for "specified fringe benefit plans" (including 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.

[Guest jigpsu100]

Thanks Lori!

[Guest 5500]

If there were over 100 participants, wouldn't there still be a 5500 filing requirement for the welfare plan?

[Lori Friedman]

If there were over 100 participants, wouldn't there still be a 5500 filing...?

Not if the plan is exclusively a premium-only cafeteria plan. In Adv. Op. 96-12A, the DOL provided that a POP does not, in and of itself, constitute a separate employee welfare benefit plan within the meaning of ERISA Sec. 3(1). Because a true POP is nothing more than an I.R.C. Sec. 6039D fringe benefit plan, and not an ERISA welfare benefit plan, there's no filing requirement. The number of participants is irrelevant.

I notice quite a bit of confusion at this message board about IRS fringe benefit plans, ERISA welfare benefit plans, and when the two sets of law overlap. It would be nice if someone at BenefitsLink could write and post an article about this subject.

[Guest 5500]

Thanks Lori.

I haven't worked with a pure POP covering > 100 participants, so I'll let my ignorance show through. I understand the POP plan itself is not considered a welfare plan since it is only a means of providing pre-tax contributions, but I'm not seeing why the underlying fully insured health plan would not have have to file when it covers over 100 participants.

96-12A does not make it clear to me that the underlying health plan does not have to file. Actually, in that situation it did. Is there any other info out there on a pure POP plan that would help me on this?

[Lori Friedman]

It's helpful to think of the POP and the health insurance plan as two separate "animals". The POP is a specified fringe benefit plan and strictly the IRS's concern. The IRS doesn't require a Form 5500 for this arrangement. The health insurance plan, however, provides ERISA benefits and has to comply with DOL's reporting rules.

If you find this whole subject confusion, you're not alone. Here's some language from the PPC 5500 Deskbook:

The term welfare benefit plan...is really a DOL term. In contrast, the term fringe benefit plan is an IRS term. The fact that the same Form 5500 has been used by two different government agencies, the IRS and the DOL, has caused much confusion about which benefit plans must file Form 5500...[T]he practitioner must weave through the maze of determining if a plan is a fringe benefit plan or a welfare benefit plan, or both, and then determine if the plan meets either of the filing exclusions of the IRS or the DOL.

[Guest 5500]

"The health insurance plan, however, provides ERISA benefits and has to comply with DOL's reporting rules."

Are we in agreement then, that the underlying fully insured plan has to file if 100 participants?