plan document question - 125, FSA and DCAP

[t.haley]

My client has three "cafeteria" plans currently in place: a POP plan, health FSA and dependent care reimb. plan. Each plan says it is intended to be a cafeteria plan under section 125. These plans were already in place when we took on the client. The plans need to be updated and restated. Normally, we would use our cafeteria plan format which includes a cafeteria plan document, adoption agreement and summary plan description which incorporates terms from a separate health FSA and separate dependent care reimb. plan docs. My question is in this case will it be too much trouble to move the client to our platform? I think this would entail "restating" the POP plan to a straight cafeteria plan with an adoption agreement listing the premium reimbursement, FSA and DCAP as benefits under the plan, and then restating the FSA and DCAP to our base plan documents. We also need to change the plan numbers for the FSA and DCAP because they are in a "wrap" document. My boss would prefer them to be on our plan document so I am trying to accomplish this in the easiest and cleanest way possible. Any ideas/pitfalls/things to be careful of?

[LRDG]

The legal cost of analysis and amending the existing docs would probably be higher than a restatement of the existing plans and docs. Unless the client has a compelling reason to remain under the existing format, the cost of doing so might encourage them to change.

I'm not sure why the plan would be formatted as 3 seperate plans and docs. Perhaps they are under the impression 3 'plans' provide discrimination testing advantages.

[LRDG]

I wouldn't consider allowing a client to BYOPD. Not without a full legal review, which in all likelyhood would be at much greater cost to the client than using our PD, one I know complies with regs and with our administrative procedures, systems, etc.

There could be significient risk involved in using an existing PD. Particularly if I'm unfamilar with the PD provider, or the possibility that the PD is not compliant, either because regs have been amended without updating the PD or because the prior PD provider was unqualified or incompetent.

I would only allow the client to bring an existing PD with some type of release of liability, hold harmless agreement or similar document in the event it's needed.

There is a legal format that as far as I know is fairly standard for restating plan docs. In addition, restatement of the plan is declared on the 5500 form, including reference to the prior plan numbers, dates, etc. I'm not familiar with a 'wrap document', so I don't know how that would impact plan numbers.