DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-209461-79]
RIN 1545-AY67
Tax Treatment of Cafeteria Plans
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Partial withdrawal of notice of proposed rulemaking and
amendments to notice of proposed rulemaking.
SUMMARY: This document withdraws Sec. 1.125-2 Q&A-6(b),(c), and (d),
and amends Sec. 1.125-2 Q&A-6(a) in the notice of proposed rulemaking
relating to cafeteria plans that was published in the Federal Register
on March 7, 1989. Further, this document amends Sec. 1.125-1 Q&A-8 in
the notice of proposed rulemaking relating to cafeteria plans that was
published in the Federal Register on May 7, 1984, and amended on
November 7, 1997 and March 23, 2000. This withdrawal and amendment are
made because of changes made to these rules in the Sec. 1.125-4 final
regulations relating to cafeteria plans published elsewhere in this
issue of the Federal Register.
DATES: Written or electronically generated comments and requests for a
public hearing must be received by April 10, 2001.
ADDRESSES: Send submissions to: CC:M&SP:RU (REG-209461-79), room 5226,
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m. to CC:M&SP:RU (REG-209461-79),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue,
NW., Washington, DC. Alternatively, taxpayers may submit comments
electronically via the Internet by selecting the ``Tax Regs'' option on
the IRS Home Page, or by submitting comments directly to the IRS
Internet site at http://www.irs.gov/tax_regs/regslist.html.
FOR FURTHER INFORMATION CONTACT: Christine Keller or Janet Laufer at
(202)622-6080 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On March 7, 1989, the IRS issued proposed regulations Sec. 1.125-2
Q&A-6 relating to the circumstances under which participants may revoke
existing elections and make new elections under a cafeteria plan.
Elsewhere in this issue of the Federal Register the IRS is publishing
final regulations under Sec. 1.125-4 that address certain parts of this
rule. Accordingly, Sec. 1.125-2 Q&A-6(b), (c), and (d) are withdrawn
and Sec. 1.125-2 Q&A-6(a) of this rule is amended.
Further, on May 7, 1984, the IRS issued proposed regulations
Sec. 1.125-1 Q&A-8 relating to the requirements that apply to
participants' elections under a cafeteria plan. Q&A-8 of these
regulations was amended on November 7, 1997 and March 23, 2000 to
conform with the Sec. 1.125-4T and Sec. 1.125-4 regulations published
on these dates, and is further amended to conform with the final
Sec. 1.125-4 regulations published on January 10, 2001.
Partial Withdrawal of Notice of Proposed Rulemaking
Accordingly, under the authority of 26 U.S.C. 7805, Sec. 1.125-2
Q&A-6(b), (c) and (d) in the notice of proposed rulemaking that was
published on March 7, 1989 (54 FR 9460) is withdrawn.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Amendments to Previously Proposed Rules
Accordingly, the proposed rules published on May 7, 1984 (49 FR
19321) and amended on November 7, 1997 (62 FR 60196), and March 23,
2000 (65 FR 15587) and the rules published on March 7, 1989 (54 FR
9460) are amended as follows:
PART 1-- INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. In Sec. 1.125-1, as proposed May 7, 1984 (49 FR 19321) and
as amended March 23, 2000 (65 FR 15587), Q&A-8 is amended by removing
the last four sentences of A-8 and adding a sentence in their place to
read as follows:
Sec. 1.125-1 Questions and answers relating to cafeteria plan.
* * * * *
Q-8: What requirements apply to participants' elections under a
cafeteria plan?
A-8: * * * However, a cafeteria plan may permit a participant to
revoke a benefit election after the period of coverage has commenced
and make a new election with respect to the remainder of the period of
coverage if both the revocation and the new election are permitted
under Sec. 1.125-4.
* * * * *
Par. 3. In Sec. 1.125-2, as proposed March 7, 1989 (54 FR 9460) and
as amended March 23, 2000 (65 FR 15587), A-6 is amended by removing A-
6(b), A-6(c), and A-6(d), redesignating A-6(e) as paragraph A-6(b),
removing the last 5 sentences of A-6(a) and adding a sentence in their
place to read as follows:
Q-6: In what circumstance may participants revoke existing
elections and make new elections under a cafeteria plan?
A-6: * * *
(a) * * * However, to the extent permitted under Sec. 1.125-4, the
terms of a cafeteria plan may permit a participant to revoke an
existing election and to make a new election with respect to the
remaining portion of the period of coverage.
* * * * *
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 01-259 Filed 1-9-01; 8:45 am]
BILLING CODE 4830-01-P
