Employer created a cafeteria plan in 1993, which it still maintains. The only benefits under the plan are insurance (medical, life, dental, etc.) premium reimbursements. The way the plan reads is that the employer pays the premiums on behalf of employees who, in turn, reduce their salaries to "reimburse" the employer. In essence, the employees are simply paying a portion of their insurance premiums. No 5500s have ever been filed for the plan. We now plan to file past 5500s with the IRS and will be requesting penalty abatement. The question we have is whether the employer faces ERISA penalties as well. It appears that since the plan only provides for premium payments (and the plan has always had less than 100 participants), it would be exempt from ERISA's reporting/disclosure requirements under 29 CFR 2520.104-20. Consequently, no ERISA penalties would apply since there was no ERISA reporting obligation in the first place. Is this analysis correct? Any other helpful information?

I agree with your analysis.

A cafeteria plan is not an "employee benefit plan" subject to ERISA. Therefore, there is no requirement under ERISA to file a 5500 for a cafeteria plan. The cafeteria plan's filing obligation arises exclusively under section 6039D of the Code. If you have only a premium conversion plan, you can deal with the IRS and be done with it. Don't even tell the DOL--they don't care.

One caveat. If your cafeteria plan includes a health FSA, the health FSA is an employee welfare benefit plan subject to ERISA. Generally, you would have to file a 5500 for the health FSA, but if you have fewer than 100 participants and you are treating the FSA as "unfunded", you don't have to file.

Bottom line: I think I get to the same place you do but for slightly different reasons.

It looks like I'm the only NON-attorney chiming in here, but we deal with the reporting requirements a lot....

JWK's nailed this one, but may have left unclear just what documents you need to fill in to let IRS know you've got a pretax contribution arrangement going. Basically, you do need to complete just a few parts of a 5500 form (sponsor name/address, plan name/number, & a checkbox (8c on the 1999 form) indicating the plan is a fringe benefits plan are about it)to satisfy the 6039D reporting requirement--at least, I'm unaware of any other 'official' format for satisfying the requirement.

Based on the data, while a lot of firms DO manage to report info on their pretax contribution arrangements, a lot do not.