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Uncertain Future for the Final Cafeteria Plan Regulations

Employee Benefits Alert

The proposed cafeteria plan regulations, initially issued by the Internal Revenue Service (IRS) in 1984 and re-issued in 2007, include an "exclusivity rule." Both the initially proposed and the re-proposed regulations declare that a cafeteria plan is the "exclusive means" through which an employer may offer an employee a choice between a taxable and non-taxable benefit without causing the employee to include the full value of the taxable benefit in his or her gross income.

In our recent article challenging the IRS's basis for imposing the exclusivity rule, we noted that the 2014-2015 priority guidance plan, as so many guidance plans before then, indicated the IRS's intention to finalize the proposed regulations.

However, in the 2015-2016 priority guidance plan, the IRS, without explanation, left the proposed cafeteria plan regulations off of its agenda. This omission has been carried over to the IRS's first quarter update to the 2015-2016 priority guidance plan. We won't speculate as to the reason for this omission, but we will monitor the situation and provide an update if and when a concrete explanation is made available.  

For more information, please contact:

Gary Quintiere,, 202-626-1491

Nicholas Wamsley*

*Former Miller & Chevalier attorney

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