Cafeteria Plan Deadline for CAA Amendments is Dec. 31, 2022

Insight By
Michael LoVasco
Topic
Employee Benefits

Employers that implemented the optional, temporary relief for cafeteria plans provided under the Consolidated Appropriations Act, 2021 (CAA) and IRS guidance must adopt plan amendments by Dec. 31, 2022. As a reminder, employers are permitted to retroactively amend their cafeteria plans for this temporary relief, so long as:

  • The amendment is adopted by the last day of the first calendar year following the plan year in which it is effective; and  
  • The plan operates consistently with the amendment terms until the amendment is adopted.

Temporary Relief for Health FSAs and DCAPs

During 2020 and 2021 plan years, the CAA provided flexibility for health flexible spending accounts (FSAs) and dependent care assistance programs (DCAPs) with respect to the following:

  • Carryovers of unused amounts remaining at the end of the plan year;  
  • Extension of the time period for incurring claims;
  • Post-termination reimbursements from health FSAs for employees who ceased participation during the calendar year; and
  • Special rules for dependents who “aged out” of DCAP coverage during the pandemic.

Mid-Year Election Change Relief

The CAA and IRS guidance allowed employees to make prospective mid-year election changes even if they had not experienced a change in status. IRS Notice 2021-15 clarified that employers could decide how long to permit mid-year election changes with no change in status during the plan year, and could limit the number of election changes during the plan year that were not associated with a change in status.

Amendment Deadlines

Calendar Year Plans: The amendment adoption deadline of Dec. 31, 2022 applies to changes for the 2021 plan year for calendar year plans. The amendment adoption deadline for the 2020 plan year was Dec. 31, 2021.

Non-Calendar Year Plans: The amendment adoption deadline of Dec. 31, 2022 applies to changes for the 2020 plan year for non-calendar year plans. For the 2021 plan year, non-calendar year plans have until Dec. 31, 2023 to adopt the amendments.

Employers are permitted to retroactively amend their cafeteria plans so long as the amendment is adopted by Dec. 31, 2022.  

Insight By
Michael LoVasco
Executive Vice President
Subscribe to our Insights
You have been signed up to receive our insights in your inbox! We'll keep you up-to-date with our best insights and information.
Oops! Something went wrong while submitting the form.
File Number

Not applicable

Topic
Employee Benefits
Published on

December 7, 2022

updated on

December 7, 2022

Disclosure

This article is for educational purposes only. The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that LoVasco Consulting Group is not engaged in rendering tax or legal services. If tax or legal advice is required, you should consult your accountant or attorney. LoVasco Consulting Group does not replace those advisors.

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a registered broker dealer and Investment Advisor, member FINRA / SIPC. LoVasco Consulting Group is independently owned and operated.

Recommended Next

Return to Insights Page

Ready to talk to a consultant?

Begin maximizing your benefits.

©2020 LoVasco. All rights reserved.

LoVasco Consulting Group and their agents are presently licensed to sell traditional life insurance in Michigan as a resident producer and numerous other states as a nonresident producer. This site is not intended as an offer to sell securities, which may be done only after proper delivery of a prospectus and a client suitability review. Proper state registration is mandatory prior to conducting business in any state. Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a registered broker dealer and Investment Advisor, member FINRA / SIPC. Check the background of this Firm and/or investment professional on FINRA's BrokerCheck. LoVasco Consulting Group is owned and operated independently from M Holdings Securities, Inc. LoVasco Consulting Group is a member of M Financial Group. Please click here for further details regarding this relationship.