Section 125 Pop Plan Documents: The Penalties for Non-Compliance

Can I Deduct Pre Tax Health Insurance Premiums - Section 125 Pop Plan Documents: The Penalties for Non-Compliance

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As many employers may be well aware by now, a prime Only Plan (Pop) Plan or Section 125 allows for employees' condition guarnatee premiums to be deducted with the use of pre-tax dollars, thereby resulting in vast tax savings for both parties. A lot of small and medium-sized businesses over the country have already availed of this tax-saving quantum in case,granted for in Section 125 of the Internal earnings aid Code.

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Can I Deduct Pre Tax Health Insurance Premiums

The process of setting up and enunciate a plan is very simple if you choose to seek the aid of a professional. But if you're one of those employers who are blissfully unaware of or are intentionally choosing to ignore Section 125 Pop Plan yielding requirements, beware. You may be in for some serious consequences.

Sponsoring a Section 125 prime Only Plan does not only come with benefits but also documentation requirements. In this regard, many employers may be ill-advised by their tax professionals, don't know where or how to start with staying in compliance, or they may have plainly forgotten.

For those who fall under any of these categories, the penalties for non-compliance can be stiff, depending also on the gravity of the violation. The penalties are enumerated in the Irs Code Section 125 to comprise the following:

1. Fines of up to ,000 or imprisonment of up to 1 year for willful violation of Erisa provisions;

2. Fines of up to ,000 and/or imprisonment of up to 5 year for production any false statement or representation of fact, knowing it to be false, or for deliberate non disclosure of any fact required by Erisa;

3. A penalty of 0 /day for failure to distribute a summary of Plan article or Spd to participants within 30 days of request;

4. A department of Labor (Dol) penalty of 0/day, up to a maximum of ,000 if an Spd is requested and is not in case,granted within 30 days.

Another key consequence that could stem from non-compliance of Section 125 Pop Plan requirements is that the sponsoring employer could be held liable for claims against the plan if the documents do not give participants definite information of the plan polices.

But that's not all. In a worst case scenario, the pre-tax deductions may be disallowed from the beginning, prominent to an Irs assessment of overdue back taxes plus interest and corresponding penalties.

As an employer you have many tasks to juggle. The circumstances described above can clearly be avoided through the advice and advice of the professionals. Make sure that your Section 125 Pop Plan documents are updated and in yielding today.

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