IRS Plan 125 (long question) - please help?
My co has been deducting our medical insurance as pre-taxed for years. When I have started with the co. we have been using QuickBooks for our payroll, then we switched to ADP Payroll for that. Now, the person who has trained me told me that our medical insurance is pretaxed. And we left it at that. I have never filed any reports to IRS (no has ADP). Now we are setting up life insurance and looking at their paperwork I read that ..."to utilize pre-tax deductions, the client company must establish and maintain a section 125 plan and comply with all relevant IRS regulations." ! OMG! I don't know if we have a plan set up with IRS, and we have never sent them any reports. I am so confused... What should I do? I am scared to tell my bosses about this problem... Does anyone know if a co must file any kind of paperwork with IRS to (1) set-up this Section 125 Plan & (2) what kind of reports I need to send to IRS to report medical and life insurance deductions that were made pre-taxed.
Public Comments
- There usually has to be some kind of written plan, at least internally in the company - not sure about IRS notification - goto www.irs.gov and search for section 125 cafeteria plans - they have publications you can download which should explain things. Was everything section 125 before you started working there? If yes, don't freak out about it. It should have been set up by senior managment
- huh, what, how, and 2 points
