New Section 125 Regulations from IRS

UPDATED 8-16-07

By now, you may have heard about the Section 125 proposed regulations recently released by the Internal Revenue Service (IRS). If adopted, these five new regulations will replace six temporary regulations previously proposed but withdrawn by the IRS. These changes reinforce the value of these types of benefit Plans.

Some of the more interesting details of the proposed regulations state:

Complete rules for the Health Savings Account, including offering it as a benefit under the Plan, how it works with the grace period, and how to handle HSA/FSA transfers.
That under these proposed regulations, S-Corporations shareholders are not eligible to participate in a Cafeteria Plan.
That the latest rules issued on debit card substantiation are still applicable. The due date of those regulations has not changed.
That all non-debit card charges must be substantiated by a third party before payment can be made.
That dependent care expenses must have incurred and be substantiated prior to reimbursement.

The proposed regulations also deal with numerous additional topics, including non-discrimination testing, individually purchased insurance premiums, the written Plan Document, vacation days as an eligible expense, qualified benefits, term life insurance premiums, fund balances at year-end, and orthodontia expenses.

These regulations will not take effect until January 1, 2009, and the particulars could easily change between now and then. TASC is staying on top of these issues... we are a progressive organization and advocate tirelessly for our customers.

As always, TASC is ready to serve the market. We continue to make substantial investments that ensure our preparedness. We are constantly reviewing updates from the IRS. And we are establishing teams to implement any necessary changes when the time is right.

Simply put, at TASC we respond, we don't react. Please watch for our future updates on this website.

To read the proposed regulations in detail, visit: http://edocket.access.gpo.gov/2007/pdf/E7-14827.pdf