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CAFETERIA TO STAY OPEN LATE
May 19, 2005
The IRS yesterday modified the "use it or lose it" rule for cafeteria plans. Such plans may now reimburse expenses incurred up to 2 1/2 months after year end (Notice 2005-42)
For example, if you defer $500 in 2005 under your cafeteria plan, expenses incurred through March 15, 2006 may be reimbursed using the $500 of 2005 deferrals. The rule had only allowed reimbursements of expenses through December 31 of the deferral year.
This will only apply for employers who amend their plan to allow the extended reimbursement period; such amendments have to be made before December 31 to be effective this year.
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WOO HOO!
Posted by: Chad | May 19, 2005 11:06 AM