Pre-tax contributions

[French]

Can an employer require pre-tax deductions only? We currently allow employees to elect pre or post-tax deductions for the health plans but wondered whether or not we could change to pre-tax only.

[SLuskin]

In the almost final regs issued August 2007, there is a provision that states that an employer can require employee contributions to be pretax if the employee wants to participate in that benefit. We have never drafted a plan that way, however.

[Guest jackmo]

Yes--it's called mandated negative elections, with opt out provision. You put a notice out to the employees annually basically stating that if they elect coverage under the group health, dental, vision, etc. plan, then the payroll deduction for that benefit will automatically be taken pre-tax, unless the employee chooses to opt out.

You MUST add the opt out provision, if you intend to mandate participation.