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IRS Temporarily Increases Flexibility for Cafeteria Plans

On May 12, the IRS issued guidance in Notice 2020-29 and Notice 2020-33 that permits Section 125 cafeteria plan sponsors to amend their plans to allow for mid-year election changes for health coverage, health flexible spending accounts or dependent care assistance. 

This guidance is in response to the current pandemic, in which employees may need to change to lower-cost health benefits, may not be able to currently use dependent care benefits or may need flexibility in contributions to a health savings account. (See Notice 2020-15 for HSA provisions.)

These plan amendments must be adopted prior to Dec. 31, 2021, and can be effective as of Jan. 1, 2020.

https://www.irs.gov/newsroom/irs-provides-tax-relief-through-increased-flexibility-for-taxpayers-in-section-125-cafeteria-plans

 

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