Cafeteria plan changes to a "wrap" document

[Belgarath]

Say a client has had 3 welfare plans under their cafeteria plan, filing separate forms. Then for 2018 changes to a "wrap" document, so only one 5500 will be required. Do you go back and amend the previously filed 2017 forms for the welfare plans to show them as "final" forms? Seems like if you just file the one new wrap plan, you'll get DOL inquiry on why you didn't file forms for the plans that get wrapped...

[Benjamin Davis]

It would depend on how the actual plan functioned. If the 3 plans ceased to exist at the end of that plan year, and only 1 remained, the 2 plans may be amended to be finalized. The DOL will see the new benefits on the continued plan, so it won't raise any questions.

If the Wrap document became effective after the renewal date, it would be advisable to file a short plan year for whatever period fell after renewal, but before the implementation of the Wrap document.

Do not try to "pull a fast one", and amend prior filings as final, if there was time after renewal, but before the Wrap document was implemented. That's the surest way to get the attention of an auditor.

I hope this helps to answer your question. If not, please let me know. I've set this thread to alert me if you reply.

Benjamin Davis   |

Vice President

Diversified Administration, Inc.

ACA, 5500, Wrap Documents, COBRA, FSA, HRA

O: (954) 983-9970 x102 | F: (954) 983-9695

6161 Washington St., Hollywood, FL 33023

[loserson]

Yes, amend to mark the 5500s as final if that was their last plan year.

See page 6 of the 5500 Instructions, left side, under Final Return/Report.  If there are no more assets or liabilities, then you file a Final 5500 after a merger.  If there was no short year for 2018 and the wrap was effective as of the first day of the plan year, then amend 2017 forms to mark as final.

Also just good practice to mark as final.  I have dealt with employers that were awash in different plans with different 5500s and it was sometimes difficult to tell if a 5500 was simply not filed for a plan or if a plan stealthily merged or terminated without filing a final 5500.