IRS Rules govern Section 125 POP Plans, also called cafeteria plans. While these provide your employees access to great benefits, and can provide your company with payroll tax savings, it's important to stay in compliance with the rules. Your company must have a written document that includes current language and must be updated regularly as legislation is changed. If the IRS finds your plan to be out of compliance, the entire plan could be invalidated, negating all of those tax savings.

Employers Should Review Plan Documents Regularly

There are several components to the POP Plan but the actual plan document is the most important. The plan document states eligibility requirements, how to enroll or waive participant, and the entry dates or plan year (example Jan. 1st,-Dec. 31st). The document also states the benefits offered through the plan. How you administer your benefits from day to day should match the written plan document. There are also requirements about how you communicate these benefits to your employees through an SPD (Summary Plan Description) and how to enroll or allow employees to waive coverage. If your company is currently deducting insurance premiums pre-tax without a formal POP Plan, or your Section 125 Plan hasn't been updated in a few years chances are you should be concerned.

Your company can avoid complications with a scheduled review of your plan document. Make sure to hire a professional to keep your plan updated with both current legislation and company specific information.

Many employers, especially if a key employee in charge of the benefits plan has left the company, may not be able to find the plan document, or may discover that there was never a plan document at all. Fortunately, TaxFreePremiums can get you into compliance in just minutes. We provide you with either a new or re-stated plan document customized to your companies plan in just minutes. Our site retains all of your documents, too, so you don't have to worry about it being misfiled or institutional memory being lost when a key employee leaves.

Professional Administration Firms Exist to Keep You in Compliance

There are POP Plan administration firms who will put your compliance worries to rest and make the entire process a breeze. Certain web-based companies retain your information so you won't have to scramble around trying to find your plan document. If you have to make changes, you can do it quickly and easily through their online portal. Their experts stay on top of all the IRS cafeteria plan regulations and provide you with compliance updates, saving you the time and effort of doing that research yourself. They also provide software that makes the IRS-mandated annual nondiscrimination testing a 15 minute process. It's fast, easy, and for just $99 per year, a great tremendous value!