Guest lmrice Posted February 5, 2001 Posted February 5, 2001 A broker approached our company trying to sell the following product: A health care spending account where the employee does NOT need to make an annual election. The employee receives a medical service, turns in a receipt, the employer takes out a pre-tax deduction for that amount from the paycheck, and then employee is reimbursed in the same check. This broker said that this fell under Section 125 (he had no paperwork to back any of this up). This makes no sense to me. I'd be interested to hear if anyone else has heard about this new "plan." Thanks.
david rigby Posted February 5, 2001 Posted February 5, 2001 Sounds like a ZEBRA to me (zero based reimbursement account). I think the IRS said no to these many years ago. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
GBurns Posted February 6, 2001 Posted February 6, 2001 IRS has said no to this re-charaterization of income many times. The first was probably Notice 84-22 and Announcement 84-24. There have also been some PLRs denying this. Unfortunately, there are a few of these products that are being promoted. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
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