ATTENTION PLAN SPONSORS: There’s not too many compliant POP Cafeteria Plans out there. The good news is we haven’t seen any badge heavy, gun toting Cafeteria Plan police raiding worksites either. But it’s always good to err on the side of caution so take this as an unsolicited Public Service Announcement intended to keep your butt out of trouble.
Do you maintain the following documents?
- Plan Document
- SPD
- Nondiscrimination Testing Results
If you don’t your Cafeteria Plan is non-compliant and the IRS can declare the plan invalid for the year with the following penalties:
- All employee premium deductions must be treated as taxable wages
- Employer must recalculate payroll taxes
- Employees may owe back taxes
- Employer may owe back FICA/FUTA