SIMPLE Cafeteria Plans

[Guest Carolyn Barnard]

I'm currently working on setting up my first SIMPLE Cafeteria Plan. I'm not seeing anything about this, but is there any requirement or liability as a TPA for making sure that the employer, in fact, contributes the required amounts for employee benefits? Is calculating the amounts going to end up being a new TPA function.? I come from the retirement world and the employer could make errors in calculating the nonelective or match amounts (as they do in a safe harbor 401(k) plan) and I'm not seeing where there's any required reconciliation or consequence for errors. There could still be discrimination issues.

Also, there's no guidance on exactly how this works, but I'm assuming it could only work as a per payroll calculation. Are payroll companies ready for this? I don't think anyone really thought this through.

And the last thing...on the nonelective, the ER must contribute $$ for every eligible person even if they don't elect to have their salary reduced. Assuming no benefits are completely employer paid, that would mean the participant waived coverage. What then happens to those contributions? It is my understanding that the ER does not have to offer a "cash-out" option. Until there's further guidance do I just recommend only the matching option? If there is guidance and I'm just not seeing it, please direct me to it.