Implementation and Compliance of Section 125 POP Plan
A Section 125 POP Plan is an effective way of saving on tax expenses for both employers and employees. It doesn’t matter if there is only one or thousands of employees, Premium Only Plans can help businesses realize significant tax savings without reducing employee pay and benefits.
Sad to say though, not many businesses are putting Section 125 POP plans to use. How come? It’s difficult to understand why this tax saving scheme thought of by the government to help augment the average employee’s income and provide businesses with a way to add to operational funds would be met with such lukewarm response.
The truth is, not too many people know about Section 125 plans and the many benefits that can be had from implementing one. Aside from the limited information on POP plans, there is also the notion that these plans are hard to implement and even harder to stay in compliance with.
On the contrary though, an employer doesn’t have to jump hoops to sponsor a Section 125 POP. In fact, there are a lot of service companies these days which offer the complete set of Section 125 plan documents and compliance requirements for a very reasonable fee.
Here are some of the basic requirements needed and the administrative procedures that an employer would have to accomplish to implement a Premium Only Plan:
1. The POP Plan Document.
The POP Plan document is the very foundation of the Section 125 plan. This is where the specifics of the plan are indicated including the plan coverage, the applicable plan year, eligibility, and procedures for election .
2. Summary Plan Description or SPD.
Another basic requirement of the law is that all plan participants and dependents should be aware of all details regarding their POP plan coverage. The SPD outlines all these information which includes procedures for filing of claims, and other key points on the sponsorship and administration of the plan. The IRS code further requires that the SPD must be distributed to the participants and their beneficiaries within 90 days of participation and 120 days after being deemed eligible, respectively.
These procedures are in accordance with Section 104b of the Employee Retirement Income Securities Act of 1974 or ERISA, the regulation designed mainly to safeguard the rights of participants and dependents of employee benefit plans.
3. Compliance.
Updating the Document whenever there are legislative changes, or changes in the information originally given is also a must. For instance, if the company transfers to a new location, then a corresponding update in the Section 125 POP Plan document must be made to stay in compliance. If compliance requirements are not met, the employer could lose its tax-favored status.
Don’t miss out on the advantages that a POP Section 125 plan provides! Drop by our site and discover a reliable and cost-effective way of getting your POP Plan document ready and updated all the time.
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