Regulations governing the general framework of cafeteria plans were proposed in 1984 but never finalized. In the ensuing 23 years, the IRS has issued numerous guidance documents on topics ranging from changing elections due to changes in status, to reimbursing expenses via debit cards. Rather than maintain this piecemeal approach, the IRS has opted to repropose comprehensive regulations. The regs encompass all previous guidance and include new rules, too, especially regarding health savings accounts (HSAs). Biggest improvement: The regs more clearly state the requirements cafeteria plans must meet, how plans can fail, and the tax consequences to employees when plans do fail. The regs are proposed to be effective with plan years beginning after January 1, 2009, but you may rely on them before that date.
Cafeteria plans must still be written. The regs detail what must go into a plan documen...(register to read more)