TO: CSI Member Schools Not Participating in the Rainbow Plan
FROM: Brian C. Meekhof, Benefits Administrator
Savings from Flexible Spending Account Plan - $875/school, $275/employee
The Flexible Spending Account Plan (the Rainbow Plan) can reduce expenses for your school through lower payroll taxes and, at the same time, can increase take-home pay for your employees. Savings are realized by taking advantage of Section 125 of the Internal Revenue Code of 1986 which allows employees to set aside pre-tax dollars to pay certain health and child care expenses. In the current year this important benefit is saving each participating school an average of over $875.00, after expenses. In addition, participating employees are saving an average of more than $275.00 in income tax this year.
Reduction in Flexible Spending Account Fees
We are pleased to announce a reduction in fees for the Flexible Spending Account Plan. Effective November 1, 1998:
à The installation fee of $300 is eliminated.
à The annual fee for the preparation of IRS Form 5500, 5500C and
the Summary Annual Report is reduced to $100 (the fee for Form
5500R remains at $100).
Cash in Lieu of Benefits
Schools which offer a cash incentive to employees eligible to opt out of the school’s insurance plan must use a Section 125 Plan. The Rainbow Plan can be used to avoid tax problems which arise when a Section 125 Plan is not used.
Now is the time to consider implementing the Rainbow Plan to benefit your school and staff for the 1999/2000 school year. If you prefer, you may also begin participating now. An Administrative Fee Schedule is on the reverse side of this communique and an overview of the Rainbow Plan is attached. If you would like more information about participating, contact me at 800-635-8288, extension 267.