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IRS
Notice 2005-42 - Purchase the Plan
Document Amendment Language to Extend Claims Reimbursements
to 14 1/2 Months for Section 125 FSA Plans for only $19.95
Order $19.95 FSA 2 1/2
Month Claim Reimbursement Extension Amendment
In a surprise move, the IRS announced a revision
to the "use-it-or-lose-it-rule" for Section 125
healthcare and dependent care flexible spending accounts (FSA).
At the employer's option, the cafeteria plan may be amended
to allow for a 2 1/2 month grace period after the end of the
plan year, during which time the participants may still incur
expenses and claim reimbursement from any unused balance in
their FSA accounts.
Core Documents Inc., a nationwide leader
in providing low cost IRS and DOL compliant Plan Documents
for Section 125, FSA, HSA and HRA Plans since 1997, has developed
a $19.95 plan amendment for employers who need to amend their
Section 125 Cafeteria plan documents to allow the new 2 1/2
month extension for healthcare and dependent care FSA claims.
Order $19.95 FSA 2 1/2
Month Claim Reimbursement Extension Amendment
Before IRS Notice 2005-42, Section 125 FSAs
required that employees incur all eligible expenses before
the last day of the plan year in order to be eligible for
reimbursement. This was because Section 125 of the Internal
Revenue Code disallowed benefits that resulted in deferred
compensation for employees.
IRS Notice 2005-42 modified the rule that
prohibited deferred compensation in Section 125 FSA plans.
At the employer's option, their Section 125 plan with either
a healthcare FSA, dependent care FSA, or both, can be amended
to include this new 2 1/2 month extension.
In order to offer the new grace period for
a Section 125 plan year, the employer must amend their plan
documents by the end of that plan year. For 2005 calendar
years the plan documents must be amended by December 31, 2005,
to add the grace period extending the claims deadline to March
15, 2005.
Order
$19.95 FSA 2 1/2 Month Claim Reimbursement Extension Amendment
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