Update on Cafeteria Plan Amendment/Restatement???

[chris]

Any update on necessity of amending cafeteria plans prior to 1/1/2001? Are there compliance issues if no amendment is made or is it the employer's choice as to making the amendment??

Thanks,

Chris

[Guest Joe Gaither]

It is our underatanding that all C-Plans have to comply with new status change reg's for plan years starting on Jan 1, 2001 & therafter. Generally, this means that doc's will have to be restated. However, IRS has unofficially stated that no push on employers to meet the deadline, if changes have been communicated to employees if some substantive form.

[KJohnson]

Joe,

It seems like the final regs are all written in a permissive form and not a mandatory form ("a cafeteria plan may permt...."). Obviously, the final regs incorporate a good deal of flexibiltiy regarding changes in status that most employers will adopt. But what in the reg is mandatory?

[Guest Joe Gaither]

KJohnson:

While there is no requirement to allow status changes in C-Plans (Treas. Reg. Sec. 1.125-4(a)), for those plans that are allowing changes under the old rules (1997 temp. & 1989 proposed reg's) they will have until the plan year beginning on or after Jan.1, 2001 to adopt the new rules or attempt to redesign the plan without status changes. Hope this clears it up.