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Premium Conversion Plan

CrashCrash 37 Posts
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Can anyone tell me how to update a premium conversion plan and SPD for the new regulations that were recently effective? Once updated is it an "amended plan", does the plan document and SPD have to be rewritten or will the mere attachment of a summary of material modification do the job?


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  • Scott RuthScott Ruth 65 Posts
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    The plan document will need to be updated to include language tracking the new
    IRS cafeteria plan regulations on permissible mid-year changes in participant
    elections. There are two sets or new regs to be concerned with: those that
    came out in March 2000 and those that came out in January 2001. These rules are
    complex and specific to the types of benefits offered through your plan. I
    would recommend consulting your benefits attorney and the person or company who
    provided you with your current document for help with new language.

    As for the Summary Plan Description (SPD) changes, while a pure premium
    conversion plan is typically not subject to ERISA, I would consider following
    the ERISA SPD rules anyway. Those rules state that issuing a Summary of
    Material Modifications will be sufficient to update your current SPD. The SMM
    should be given to all current participants and with SPDs to new participants.
    A new rewritten SPD should be issued every 10 years, unless there have been
    amendments to the plan in which case a new SPD should be issued within 5 years
    from the amendment.

    Scott Ruth







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