New Cafeteria plan regs

[tsrl01]

After reading the regs and various commentators, I did not think group legal was a permissible benefit in the cafeteria plan. However, during a Sept 4 discussion with various IRS officials, the woman indicated that one could incorporate a group legal plan in a cafeteria plan (but added that she didn't see why anybody would do it). So, I am a little confused. Any thoughts?

[rocknrolls2]

Because Section 120 of the Code has expired and not been extended, if the employer were to pay the premiums for group-legal coverage, the employees would be taxable on the premiums. More commonly, group-legal plans provided by employers are generally provided on an employee pay all basis. in that way, the premiums are being paid with after-tax contributions and the employee is not subject to tax on either the premiums or the benefits under the plan. While not a lot of employers currently do it, the reason for this is that the status of offering group legal benefits on an after-tax basis under a cafeteria plan was uncleear. The final regs should make it clear that group legal can be offered as a permitted taxable benefit. This would result in more employers offering it under a cafeteria plan.