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Regulation and Compliance > Federal Regulation > IRS

IRS Eases Cafeteria Plan Reporting Rules

By Allison Bell

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NU Online News Service, April 17, 6:16 p.m. – The Internal Revenue Service is trying to give sponsors of section 125 cafeteria plans and some other plans a break on tax reporting requirements.

The agency says employers that sponsor cafeteria plans, section 127 educational assistance programs and section 137 adoption assistance programs, can stop attaching Schedule F “annual information returns” to their plans’ Form 5500 returns.

“This notice does not affect annual reporting requirements under Title I of the Employee Retirement Income Security Act,” Felix Zech, an IRS associate chief counsel, writes in Notice 2002-24, the document that explains the new policy.

Sponsors of cafeteria plans, educational assistance programs and adoption assistance programs still have to file Form 5500 returns and all required schedules other than Schedule F, Zech writes.

But the IRS is promising not to trap sponsors that rely on its advice to stop filing the Schedule F returns.

“This notice is effective upon publication and applies to all plan years for which information returns have not been filed,” Zech writes. Any future reporting obligations “will apply only to plan years beginning on or after the date of publication of further guidance.”

Internal Revenue Code section 6039D began requiring sponsors of cafeteria plans and several other benefit programs, such as section 105 and section 106 accident and health plans, to file annual information returns starting in 1984.

A notice issued in 1990, Notice 90-24, let the accident and health plans and some other plans drop the annual information returns, but it required sponsors of cafeteria plans, educational assistance plans and section 120 group legal services plans to continue to filing Schedule F information returns.

The IRS is now deciding whether filing Schedule F returns is an appropriate way to meet the section 6039D reporting requirements, Zech writes.

The full text of the notice is available on the IRS Web site. at //www.irs.gov/pub/irs-drop/n-02-24.pdf

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