On May 12, 2020, the IRS released Notice 2020-29, which provides temporary flexibility for mid-year election changes under a Section 125 cafeteria plan during calendar year 2020. The changes are designed to allow employers to respond to changes in employee needs as a result of the COVID-19 pandemic. This Compliance Bulletin summarizes the additional mid-year election changes.
On May 12, 2020, the IRS released Notice 2020-29, which provides temporary flexibility for mid-year election changes under a Section 125 cafeteria plan during calendar year 2020. This Legal Update provides a brief summary of this relief.
On May 12, 2020, the IRS announced more options with respect to unused amounts in health flexible spending accounts (FSAs) and dependent care assistance programs (DCAPs). These options allow employers to permit an extended period for incurring health FSA or DCAP expenses and health FSA carryovers of up to $550. This Legal Update summarizes the new options.
This month's Benefits Buzz announces the new FSA contribution limits and discusses the DOL's new proposed method for retirement plan disclosures.
To qualify for favorable tax treatment, a Section 125 plan (or cafeteria plan) cannot discriminate in favor of highly compensated employees. This Compliance Overview provides a general summary of the three nondiscrimination tests for cafeteria plans: (1) the eligibility test; (2) the benefits and contributions test; and (3) the key employee concentration test. It also discusses exceptions and safe harbors that apply to the nondiscrimination tests.
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