| If Your Deducting Insurance Premiums Pre-Tax the IRS Requires a POP Plan |
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| Written by Louis McCoy |
| Thursday, 21 April 2011 12:44 |
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The Internal Revenue Service has oversight over Section 125 POP Documents. Although there are substantial tax savings for your and your employees through the POP Plan there are also a host of government regulations to keep in compliance. One requirement many employers fail to recognize is the need for a written plan document that contains current legislation and company specific information. The document is required to be updated as the law or specific company information changes. The IRS could find your plan unqualified if you don't follow these compliance steps which could then trigger a taxable event for premiums already run through pre-tax as well as penalties and fines.
The Internal Revenue Service has oversight over Section 125 POP Documents. Although there are substantial tax savings for your and your employees through the POP Plan there are also a host of government regulations to keep in compliance. One requirement many employers fail to recognize is the need for a written plan document that contains current legislation and company specific information. The document is required to be updated as the law or specific company information changes. The IRS could find your plan unqualified if you don't follow these compliance steps which could then trigger a taxable event for premiums already run through pre-tax as well as penalties and fines. Plan Documents Should be Reviewed and Regularly The actual Plan Document is the most important of the documents in your POP Plan. This document spells out specifically which participation eligibility, how to enroll or waive participation for employees, the plan year (e.g. Jan.-Dec.), and the specific benefits or type of benefits offered in the plan. The contents of your plan document needs to match the day-to-day management of your employee benefit administration. There are also specific and required communication such as how and when to distribute the SPD (Summary Plan Description), enrollment notices or waivers to eligible participants. Employers who are making pre-tax deductions without a current and written plan document, or an out of date document are will find themselves out of compliance. Your company can avoid complications with a scheduled review of your plan document. Make sure to hire a professional to keep your plan updated with both current legislation and company specific information. Often the employer tasks a key employee in charge of the benefits plan. When or if this key employee transitions out of the company you may not be able to find the written document, or may discover you've never had a formal document. Fortunately theirs a solution. www.taxfreepremiums.com will create or re-state a custom company document in minutes. They retain all the documents online for you so you never have to worry about misfiled or lost documents again. Professional Administration Firms Exist to Keep You in Compliance The professionals at taxfreepremium.com will put you at ease, as they provide everything necessary to get and stay in compliance. Copies of the documents are available online through their SSL encrypted login where clients can make changes online through the portal. Their experienced staff stay on top of IRS regulations and provide automated compliance updates via e-mail push technology which saves you the effort and headache of researching on your own. They also provide the software for annual non-discrimination testing. With a step-by-step checklist, everything you need is at your fingertips for a low annual fee of only $99. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn more about a Section 125 Plan and how taxfreepremiums.com can help your company with your POP Plan Administration. |