|
By now, you may have heard about the Section 125 proposed regulations recently released by the Internal Revenue Service (IRS). If adopted, these five new regulations will replace six temporary regulations previously proposed, but withdrawn by the IRS. Some of the current regulations have had major issues since their inception in the mid-80s and the industry has clearly needed more guidance.
Some of the more interesting details of the proposed regulations state:
Complete rules for the Health Savings Account, including offering it as a benefit under the Plan, how it works with the grace period, and how to handle HSA/FSA transfers.
That S-Corporation shareholders are not eligible to participate in a Cafeteria Plan.
That the latest rules issued on debit card substantiation are still applicable. The due date of those regulations has not changed.
That all non-debit card charges must be substantiated by a third party before payment can be made.
That dependent care expenses must have been incurred and be substantiated prior to reimbursement.
The proposed regulations also deal with numerous additional topics, including non-discrimination testing, individually purchased insurance premiums, the written Plan Document, vacation days as an eligible expense, qualified benefits, term life insurance premiums, fund balances at year-end, and orthodontia expenses.
These regulations will not take effect until Jan. 1, 2009, and the particulars could easily change between now and then. We are constantly reviewing updates from the IRS, and will keep you apprised of any significant changes affecting these plans. In the meantime, if you have any questions concerning the new proposed regulations, please contact your Rea & Associates representative.
-By Paul McEwan, CPA, MT (Pension Services)
|
Full Newsletter
