Health Care Reform Introduces Simple Cafeteria Plans For Small Businesses In 2011
Health care reform recently introduced a new concept that will start next year: "Simple Cafeteria Plans" for small businesses with generally no more than 100 employees. This new cafeteria plan option, available for plan years beginning after December 31, 2010, is different from the SIMPLE (Savings Incentive Match Plan for Employees), a retirement plan currently available for small businesses. Although the new option is considered simple because it does not require nondiscrimination testing, the price tag for this simplicity can be quite high. Most small employers will be better off taking a wait-and-see approach until the IRS issues guidance on plan contributions.