[Federal Register Volume 66, Number 7 (Wednesday, January 10, 2001)]
[Proposed Rules]
[Page 1923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-259]


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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.

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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