[Date]
[Client Name]
[Client Address]
[Client City, State, Zip]
Dear [Client Name]:
This letter is to let you know that our services include cafeteria plan
design, implementation, and compliance services. Evaluating your current
cafeteria plan and developing a comprehensive strategy can help ensure
that your entire benefit plan establishes a competitive edge to attract
and keep employees while maximizing your business’s income and equity
goals.
Our compensation planning staff is well trained in
state-of-the-art planning and design techniques. We can assist you in
maximizing your company’s tax savings as well as in making sure your
plan meets the Internal Revenue Service’s strict qualification and
nondiscrimination requirements for cafeteria plans. There are several
recent tax law changes that affect the benefits that may be offered
under cafeteria plans. The definition of qualifying child, which can
affect whether a child qualifies for medical coverage as a dependent,
has been changed, and new IRS guidance clarifies how children of
divorced or separated parents are treated for purposes of
employer-provided tax-free health care benefits. Additionally,
Michelle’s Law ensures that dependent college students who take a
medically necessary leave of absence do not lose health insurance
coverage. However, providing the continued coverage under the cafeteria
plan may violate the cafeteria plan rules. Therefore, your current
cafeteria plan may need to be amended so that it precisely follows all
the rules in terms of plan design, written plan documents, and
operations in order to retain all the benefits and tax savings
associated with cafeteria plans. Compliance with various governmental
reporting requirements should also be verified to avoid substantial
penalties for failure to file such reports.
We believe in a team approach to planning. As experienced professionals,
we can add value to your overall benefit plan. I will call you next week
to see how we may assist you in making the most of your cafeteria plan
and in keeping abreast of the laws regarding cafeteria plan compliance
and nondiscrimination.
Best regards,
__________________________
(Planner or client contact person)
Note:
a Regs. 301.7216-1 through -3 impose stringent rules on
disclosing and using tax return information on tax return preparers. If
the client is a tax-only client (i.e., the practitioner has not been
engaged to provide other services), the practitioner must obtain written
consent prior to sending out materials discussing or promoting nontax
services. See section 802 for a discussion of the disclosure
requirements and exceptions.
