Cafeteria Plans

 

A cafeteria plan is a written plan that allows employees to choose among two or more benefits consisting of taxable cash and specific non-taxable, qualified benefits. A cafeteria plan enables employees to make pre-tax contributions for health benefits and dependent care assistance. Payroll executes this withholding. Whether benefits provided through a cafeteria plan are or aren't taxable depends on whether they are taxable outside the cafeteria plan.

Among the specific benefits a cafeteria plan may offer are: 401(k) plans; health benefits, including flexible spending accounts (FSAs) and health savings accounts (HSAs); adoption assistance; dependent care assistance, including dependent care FSAs; and group-term life insurance, including costs that are includable in wages. Benefits that can't be offered through a cafeteria plan include: athletic facilities; de minimis fringe benefits; educational assistance; employee discounts; employer-provided meals and lodging; moving expense reimbursements; no-additional-cost services; transportation fringe benefits; and working condition fringe benefits.

Special W-2 reporting rules apply to some benefits offered through a cafeteria plan.  Continue cafeteria plans.

 

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NEWS/ARTICLES

Congress's HEART Act Is Benefits Headache

Propsed HSA Regs Cover Two More Outstanding Issues 

Beat Rising Health Premiums With HRAs And HSAs 

IRS Issues HSA Rollover Rules 

HSAs Tweaked, Again; Mental Health Parity Act Reauthorized For One Year 

IRS Reproposes Comprehensive Cafeteria Plan Regs 

Increase Enrollment In Your Health Savings Account (HSA) Program

Help Employees Find A Work/Life Balance

DOL Comments On Cafeteria Plan Payments And The FMLA

 

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FAQs 

1. My company offers a Section 125 Cafeteria Plan with flexible spending accounts. The enrollment forms state that if an employee leaves before the end of the plan year, his/her final paycheck will be reduced by any amounts reimbursed by the plan that exceeded contributions. Is this legal?  
   
   

2. Can a cafeteria plan allow employees who are going out on FMLA leave to pre-pay for benefits on a pre-tax basis? 
   
   

3. Are cafeteria plans limited to providing group-health benefits? 
   
   

4. An employee terminated with money left in her dependent care FSA. Can the FSA reimburse her post-termination dependent care expenses? 
   
   

5. Can retirees take their 401(k) distributions and contribute them into the cafeteria plan for health benefits? What if the 401(k) distribution is rolled over directly into the cafeteria plan? 
   
   

6. To help employees who can't afford to have amounts deducted from their pay, the company wants to lend employees amounts equal to their pre-tax deductions. The loans will become due and payable when employees submit claims to the FSA. When that happens, the claim will be offset against the loan, thus canceling everything out. For employees who don't submit claims, the loans will be forgiven. Is this OK? 
   
   

7. Can an employee who is sending her child to day camp for the summer change her dependent care FSA? 
   
   

8. Our health FSA and dependent care FSA provide for a two-and-a-half month grace period. What options do employees have during this time? For example, can employees cash out or convert unused benefits to other taxable or non-taxable benefits? 
   
   

9. How does Michelle's Law impact flexible spending accounts (FSAs)?