›

FSA and Section 125 Plan requirments

dchamberlindchamberlin 1 Post
in Benefits & Leave Vote Up0Vote Down
Is an employer required to maintain both a FSA plan document and a Section 125 plan document are are they one in the same? I always understood the Section 125 plan document to cover the employers entire cafeteria plan and the FSA plan doc to cover the DFSA and HFSA. The terms FSA and Section 125 plan are used interchangeably which makes it confusing at times as I view them as different things.
Share on Facebook Share on Twitter

Comments

  • 7 Comments sorted by Votes Date Added
  • ACU FrankACU Frank 2,188 Posts
    PMVote Up0Vote Down
    I have a medical FSA document (supplied by my TPA) and a dependent care FSA document (also via TPA). Both mention S. 125, but I don't have a separate S. 125 doc.
    Share on Facebook Share on Twitter
  • NaeNae55NaeNae55 3,243 Posts
    PMVote Up0Vote Down
    Section 125 refers to the actual tax code that allows Flexible Spending Arrangements or FSAs. That is why they are used interchangeably. FSA plans can cover health, dependent care, health insurance plans (including dental and vision), as well as parking and transportation plans. They are all covered in Section 125 of the tax code. The Plan Documents can be written separately, or you can join items together.

    Cafeteria plans are really when a company gives a group of options of benefits for employees to choose from (like choosing a meal from the cafeteria). In other words, any company who offers a choice of options of benefits for employees to choose from, even if some are Section 105 (like an HRA) is a cafeteria plan. If the company only offers Section 125 arrangements it can still be considered a cafeteria plan.
    Share on Facebook Share on Twitter
  • NaeNae55NaeNae55 3,243 Posts
    PMVote Up0Vote Down
    dchamberlin:

    I just re-read your post and I think you may be talking about having a document for the premium portion of your health plan (also known as POP). Then you have another document for health reimbursement and dependent care. This is very common. The POP enables you to make your premiums pre-tax. The other document allows for reimbursement to employees. They are still both covered under Section 125 of the IRS tax code; they are still both FSA items and eligible for handling pre-tax; they are still both considered cafeteria plans (the IRS refers to them as cafeteria plans on their website.)

    I hope this answers your question.

    BTW, welcome to the forum!
    Share on Facebook Share on Twitter
  • Sharon McKnight SPHRSharon McKnight SPHR 737 Posts
    PMVote Up0Vote Down
    dchamberlin

    Your first post! Welcome to the Forum. :welcome:

    Sharon
    Share on Facebook Share on Twitter
  • jjohnstonjjohnston 1 Post
    PMVote Up0Vote Down
    Anyone out there know how they are going to affect the FSA reporting on section 125 Cafeteria plans for W-2 purposes? My understanding is the salary redirection portion is what needs to be reported but it seems like this will be a very manual process for W-2's.
    Share on Facebook Share on Twitter
  • NaeNae55NaeNae55 3,243 Posts
    PMVote Up0Vote Down
    I thought only the max had changed in 2013 (from $5,000 to $2,500). As far as I know, everything else remains the same.

    Anyone else know of any changes?

    PS: Welcome jjohnston!
    Share on Facebook Share on Twitter
  • Sharon McKnight SPHRSharon McKnight SPHR 737 Posts
    PMVote Up0Vote Down
    [quote=jjohnston;724621]Anyone out there know how they are going to affect the FSA reporting on section 125 Cafeteria plans for W-2 purposes? My understanding is the salary redirection portion is what needs to be reported but it seems like this will be a very manual process for W-2's.[/quote]


    Your first post! Welcome to the Forum. :welcome:

    Sharon
    Share on Facebook Share on Twitter
Sign In or Register to comment.