Benefits administrators can be forgiven if their response to the IRS’ latest plan to issue guidance on cafeteria plans is “Promises, Promises!”
Finalizing cafeteria plan regulations is the most far-reaching benefits-related item on the IRS 2011-2012 Priority Guidance Plan. The agency proposed café plan regs in 2007 and has been saying that it will finalize them ever since.
The Priority Guidance Plan promises to create new rules not just for cafeteria plans but also for health flexible spending accounts (FSAs) and health savings accounts (HSAs) before June 30, 2012.
Health FSAs
Courtesy of the health reform law, on Jan. 1, 2013 no more than $2,500 can be contributed to health FSAs through cafeteria plan pre-tax salary reductions. The IRS says it plans to issue guidance on this limit.
HSAs
The IRS plans to issue regulations on how Section 125 and Code Section 4980G interact regarding comparable employer contributions to employees’ HSAs. This could be especially interesting, since employees — not employers — establish HSAs and fund them.
IRS to Employers: Hurry Up and Wait
The IRS makes clear that just because it lists particular items of guidance or regulation in the plan doesn’t mean they will necessarily be issued by June 30, 2012, which is the end-date of the period covered by the guidance plan. But even if they aren’t, the IRS may do so at some point after that date.
Employers, plan administrators and TPAs should be ready to make adjustments to their plans and procedures if need be. And they should make sure they keep informed and pay attention to what the IRS is doing in these areas.