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Does an employer need to have a POP document in place for their company?

YES - If an employer allows or is planning to allow employees the option of paying for qualified benefits on a pre-tax basis, then, they need to have a Section 125 Premium Only Plan in place. Regulations are clear that any failure to operate in accordance with the terms of the plan or the requirements of Section 125 will disqualify the plan (it will not be a cafeteria plan) and result in taxable income to participants. In other words, if the cafeteria plan fails to follow the rules anyone participating in the plan will lose the tax benefits he or she would have otherwise received.

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