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Participant elections under an Internal Revenue Code (Code) Section 125 cafeteria plan must be made before the first day of the plan year or the date taxable benefits would currently be available, whichever comes first. Participant elections generally must be irrevocable until the beginning of the next plan year. This means that participants ordinarily cannot make changes to their cafeteria plan elections during a plan year.
Employers do not have to permit any exceptions to the election irrevocability rule for cafeteria plans. However, Internal Revenue Service (IRS) regulations permit employers to design their cafeteria plans to allow employees to change their elections during the plan year, if certain conditions are met.
Regulations issued by the IRS list the permitted events that may be cause for a mid-year election change. Also, the IRS expanded the mid-year election change rules in response to certain Affordable Care Act (ACA) provisions, as well as theCOVID-19 pandemic.
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