Section 125 and credit unions
clh
9 Posts
This is my first post to the forum, but I've been listening in for a while & appreciate the wealth of info available from all you seasoned forumites. I work for a growing manufacturing company in Maryland. A little more than a year ago I went from being bookkeeper, personnel, benefits, etc. to HR, etc, etc. (sometimes my head swims, but I'm learning). Having said all that, I'll get to the point of my post.
I've almost convinced my boss to offer a new benefit to our employees ... membership in a rather large credit union (state chartered, federally insured). If I've "done my homework" correctly, I am seeking to remove his last concern by trying to prove a negative. His concern is that by making such a benefit available we may be subjecting the company to additional labor, cost, etc. (He is under the impression that this benefit, too, is subject to Section 125 regs). The cost and scope of exposure to the laws & agencies governing Section 125 Cafeteria Plans has hit home now that we have a qualified third-party working on bringing our group health insurance (a POP) into full compliance. Our our 401k plan has been in compliance since day one (still there's a lot of internal work that goes into such an "easy" arrangement to maintain compliance).
So IF I represent offering credit union membership, as a benefit, correctly it is NOT subject to Section 125 regs because:
(1) There is no minimum number of participants (one joins or 100 join, it's all the same). Membership is strictly voluntary.
(2) We already offer direct deposit to our employees; if they choose to participate, they designate (in writing) where & how much of their pay is deposited into which accounts. For employees who wish to join, direct deposits into the credit union would be handled exactly the same. No additional fiduciary responsibility.
(3) Credit union membership is exempt from Section 125 regs because it falls in under the catagory of "De Minimis" benefits (very little or no cash value).
Have I got this right? Did I miss any thing? Am I way off base? Let me know.....and thanks, in advance
I've almost convinced my boss to offer a new benefit to our employees ... membership in a rather large credit union (state chartered, federally insured). If I've "done my homework" correctly, I am seeking to remove his last concern by trying to prove a negative. His concern is that by making such a benefit available we may be subjecting the company to additional labor, cost, etc. (He is under the impression that this benefit, too, is subject to Section 125 regs). The cost and scope of exposure to the laws & agencies governing Section 125 Cafeteria Plans has hit home now that we have a qualified third-party working on bringing our group health insurance (a POP) into full compliance. Our our 401k plan has been in compliance since day one (still there's a lot of internal work that goes into such an "easy" arrangement to maintain compliance).
So IF I represent offering credit union membership, as a benefit, correctly it is NOT subject to Section 125 regs because:
(1) There is no minimum number of participants (one joins or 100 join, it's all the same). Membership is strictly voluntary.
(2) We already offer direct deposit to our employees; if they choose to participate, they designate (in writing) where & how much of their pay is deposited into which accounts. For employees who wish to join, direct deposits into the credit union would be handled exactly the same. No additional fiduciary responsibility.
(3) Credit union membership is exempt from Section 125 regs because it falls in under the catagory of "De Minimis" benefits (very little or no cash value).
Have I got this right? Did I miss any thing? Am I way off base? Let me know.....and thanks, in advance
Comments
>you invited a local bank to put an ATM in your
>lobby - not at all.
MrCreosote,
I love your analogy.....it will, indeed, manage to provide the confirmation I need to show my boss.
Knew there'd be at least one seasoned forumite who'd be willing to lend their knowledge & quick wit to "prove a negative". Have a great weekend & thank you verrrrrry much!
Carol