Is an employee only funded cafeteria plan exempt from filing Form 5500

[Guest Tara Curran]

A new client of ours has not filed a Form 5500 since 1994 for its cafeteria plan. It is entirely funded by employee salary deductions for medical and dental insurance premiums and has no trust. There have been several changes in controllers over this period of time, but I have been able to talk to one of them that was at the Company during part of that time period. He indicated to me that he contacted the IRS and they informed him of some obscure revenue ruling that exempted this type of plan from filing a Form 5500. Can anyone tell me if this is true?

[Guest nherkowitz]

A cafeteria plan is considered a "fringe benefit plan" under IRC section 6039D. All fringe benefit plans are required to file Form 5500 and Schedule F. There is no exception for employee contributions, especially as many cafeteria plans are exactly this type of plan.

This applies regardless of whether the underlying benefits need to file Form 5500. The underlying benefits are considered "welfare benefit plans". There are a number of instances where they are excluded from filing(see page 3 of the Form 5500 instructions).

[Guest Paul]

No promises but the IRS has waived the penalty for filing the Form 5500 late for a "fringe benefit plan." Compare this to the reduced penalty under the deliquent filer program under the DOL for "welfare benefit plans."