Mistakes on Cafeteria Plan election forms.

[Guest Pohai]

I made a mistake on my cafeteria plan election forms. I should have elected to have monies taken out for the health care portion, but instead elected to have funds withheld for the dependant care portion. Do I have any options to make a change or am I stuck till the next enrollment period comes around?

[Guest jreddi]

Seems to me if you made an honest mistake, you should not be penalized for it. I remember --but not the exact reg-- that the IRS permits a change due to an administrative error or an honest error on the part of the ee. As a benefits manager, I have allowed such changes early in the year (first or second paycheck of the year only).

[Guest fibmcgee]

The answer to your question can be found in "The Top Ten Questions Asked" presented by Sharon Cohen of the IRS Employee benefit Branch 6. Question 3 States --

Q-3: May participants make election changes when an initial election was the result of a mistake on the employee’s part?

A-3: If the evidence is “clear and convincing” that the employee made the election mistakenly, then an elec-tion

change may be allowed. An example of “clear and convincing” evidence would be an employee electing coverage for which he or she has no use, e.g., an elec-tion for dependent care when the employee has no dependent who would qualify for the benefit. In such cases,the employer can refund contributions made and tax them, and allow a new election on a prospective basis.An example of an employee “mistake” for which an election change would not be permitted is an employee overestimating contributions to a health care spending account.

The ultimate decision will rest on the employer who in most cases can be more conservative than the regs.

[GBurns]

Where can these "Top ten questions..." be found?

[Guest fibmcgee]

This information can be found in Spencer Reports 351.-19 dated 4/2/99 entitled "On Sec. 125 Questions and Answers,Concerning Unanswered Issues In Proposed, Temporary Regulations"

[Guest myvettee]

I just picked up the information from member, "fibmcgee" regarding where the Top 10 questions can be found. Fibmcgee, you stated that they can be found in Spencer Reports, 351-19 dated 4/2/99 entitled "On Sec-125 Questions and Answers, Concerning Unanswered Issues in Proposed, Temporary Regulations. (Help!)

Where are the Spencer Reports? Can I find these Spencer Reports in my Cafeteria Plan book. If not please point me in the right direction. I will continue to look if this is where I'm to find them. If you can, please be more specific. Thank you in advance for all your help. Yvette

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[Guest ealbion]

Where are the Spencer Reports?

[Lisa Hand]

Another possibly better source, since it is direct from the IRS, is the current posting from the EBIA on Benefits Buzz, entitled "IRS Officals Comment on New Cafeteria Plan Regulations on Mid-year Election Changes"