IRS SECTION 125

Don’t Let The IRS Take a Bite Out Of Your Employee’s Benefits?

Many employers incorrectly administer their Section 125 plans.

The majority of these problems go unnoticed. However, if the IRS audits your plan, wrongful deductions could be disallowed and your organization could be assessed substantial monetary penalties.

Do you:

• Update your Plan Document to Reflect Changes in the Code?
• Distribute Summary Plan Descriptions to all Participants?
• Circulate notice of Material Modifications every time your plan is updated?
• Coordinate your Section 125 plan with Other Benefit Legislation?
• Enforce all Qualifying Events on a Strict and Non-Discriminatory basis?

Is your Section 125 Plan in Jeopardy?
Could your plan pass the tests of the IRS & the DOC? If your plan is disallowed, what are the consequences?

• Pay monetary penalties levied by the IRS
• Pay monetary penalties levied by the D.O.L.
• Reissue W-2 forms dating back several years
• Amend corporate tax returns from prior years
• Pay Attorney fees for representation in court or mediation

The Hidden Cost is difficult to measure:

• Negative impact on workforce morale
• Hundreds of hours in extra work for your accounting staff
• Exposure to more extensive audits by the IRS

We will provide a Comprehensive Compliance Check

• We identify any problem areas with our audit format
• Present recommendations & rationale
• Adjust your current plan & implement solutions
• Monitor progress & keep you updated

If you have a problem with your current plan. . .

• Mitigate problems as soon as they are identified.
• Try to find an amnesty program. Any problems should be brought to your CPA and the IRS so that potential future escalating penalties may be avoided. Generally, it is advisable to seek the advice of an attorney before approaching it is advisable to seek the advice of an attorney before approaching the IRS.
• Update your plan and correct issues as soon as possible. Document all of the corrections well as the IRS is always looking for signs of “Good Intent."
• Ask a qualified service provider to review your entire program to ensure that important areas are not overlooked.
• Have a qualified expert monitor your program periodically. Most employers are not equipped to keep up with the increasingly complex benefits environment.

Section 125 Plans are very popular and relatively easy to install. But are you aware of the many pitfalls your organization could fall prey to by offering a cafeteria plan? If the administrative side of your plan is not in compliance with current laws and directives, you could face some potentially devastating penalties and both your employees and the organization could face some very unpleasant tax consequences.

CALL your Spetner Associates, Inc. Specialist to help YOU be Compliant with Section 125
314-442-0000
Fax 314-442-0050
8630 Delmar Blvd., Suite 100
St. Louis, MO 63124

Spetner Associates, Inc.