May pre-tax premiums be carried over from one calendar year to the nex

[Guest mfurnstahl]

I've been looking for an answer to this question and have been unsuccessful to date. We set up payroll deductions to deduct premiums for health and dental insurance on a pre-tax basis if an employee so desires. If an employee were to go on a leave and miss some deductions, can these pre-tax premiums be extended into the next calendar year? Or must all premiums for one calendar year be taken during THAT year? Any help with this question would be greatly appreciated.

Thank you in advance.

[Guest kclark]

I had this same question/situation a few months ago and did some extensive research on the subject.

First of all, there is a difference if the leave is an FMLA leave as to how it is handled. I will tell you what I found out pertaining to a NON FMLA leave.

As per the IRS, it is impermissible to take any retroactive PRE-TAX deductions from future salary in a Section 125 plan or allow retroactive elections with the exception of the following HIPAA special enrollment events:

1. Birth of a baby

2. Adoption or placement for adoption.

The only way you could take retroactive (missed) deductions in this type of situation is to do it on an after-tax basis.

I also addressed this with our legal dept. and they agree!

I know, I was doing it wrong......we were taking retroactive pre-tax deductions in this situation also-----not anymore!

I would think there would be additional issues with carrying them over to the next calendar year, i.e., W2 issues (money earned in a different year), deduction amounts may have changed from previous year, etc.

Hope that helps!

[Guest mfurnstahl]

Thank you kclark for your response. I was doubtful pre-tax premiums could be taken in a different calendar year than originally planned, but needed clarification. Do you know where you found your answer to this question? I would like to print it out for my colleagues so we have a hard copy explaining our reasoning.

Thank you again.

[Guest kclark]

Maureen:

I actually got it straight from someone who was a former IRS Agent and actually wrote this regulation and is now with a consulting firm we use!

I can check with her and get the actual regulation if you like. Probably won't be able to get it until next week.

Kathy

[Guest mfurnstahl]

That would be fantastic Kathy! Thank you!

Maureen