section 125 regs- election changes after open enrollment, but before plan year

[Guest JayMay]

I have an employee who forgot to complete his benefits update prior to the close of open enrollment in April. The system automatically defaulted to a standard plan and "waived" his dental and vision plans. Our plan year does not occur until June 1st, but our corporate benefits department is telling him that sec 125 requires they stick to an enrollment window and that the only permissible changes outside of open enrollment are "qualifying events". The employee is arguing that restrictions under sec 125 should only apply once the plan is in effect and payroll withholdings begin. I tend to agree and want to help him in anyway possible, but I am not sure what advice to give since corporate has told him no changes.

Any advice is appreciated,

Thanks

JM

[QDROphile]

Section 125 requires that salary reduction elections be determined before the coverage period, which appears to be June 1. The earlier deadline was probably determined based on administrative needs. The deadline may be included in plan terms. Exception to the deadline or change depends on policy and plan terms. "Corporate" is telling you that that "corporate" does not want to do what it needs to do to accommodate. The accommodation may involve formal requirements (such as plan amendment) and implications (such as opening the door to accommodate every flake in the company) that are not obvious to you. If "corporate" is the policy decision maker for administration and plan terms, then you cannot gainsay, whether or not you think "corporate" is being reasonable. You can try to change someone's mind.

[GBurns]

Have the employee ask the Benefits Dept to show or cite where the section 125 regulations state anything about an open enrollment window. I doubt that they can.

[Peter Gulia]

The plan's administrator might consider whether its duties include a duty to obey the plan's terms (to the extent that the plan's terms are not contrary to applicable law).

Also, some plan administrators might correct an election if the participant shows that a failure to meet a due date resulted from the participant's physical or mental disability.

In the absence of such a disability, a plan's administrator might evaluate carefully - especially if applicable law includes a fiduciary duty of impartiality - whether and why it should afford relief to a participant who failed to meet a due date that others were bound by (and met).