60196 Federal Register / Vol. 62, No. 216 / Friday, November 7, 1997 / Proposed Rules

1Published as a proposed rule at 49 FR 19321

(May 7, 1984).

2Published as a proposed rule at 54 FR 9460

(March 7, 1989).

users the ability to create a passive

booking on an airline if that airline asks

the system to terminate that capability

(a passive booking is a booking

transaction that is not sent to the

airline’s internal reservations system).

We believe that the issues raised by

America West’s petition warrant further

consideration. We are aware of

complaints from other participating

airlines raising similar concerns. Our

advance notice of proposed rulemaking

in Docket OST–97–2881 therefore

included this among the specific issues

that we asked commenters to address.

62 FR at 47610 (para. 12). We thus

intended to consider this issue in our

overall reexamination of the rules.

To facilitate our consideration of the

issues presented by the America West

petition, commenters should include

their responses to the petition in their

comments and reply comments on our

advance notice of proposed rulemaking.

America West itself is filing its petition

as a response to the advance notice.

Petition at 2, n. 2. Considering America

West’s proposals in that proceeding,

Docket OST–97–2881, will be more

efficient than considering them in a

separate docket. Commenters therefore

should not file comments on the

petition in the docket for America

West’s petition.

Issued in Washington, DC on October 31,

1997, under authority delegated by 49 CFR

§ 1.56a(h)2.

Patrick V. Murphy,

Deputy Assistant Secretary for Aviation and

International Affairs.

[FR Doc. 97–29467 Filed 11–6–97; 8:45 am]

BILLING CODE 4910–62–M

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–243025–96]

RIN 1545–AU61

Tax Treatment of Cafeteria Plans

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Partial withdrawal of notice of

proposed rulemaking, amendment to

notice of proposed rulemaking, and

notice of proposed rulemaking by cross

reference to temporary regulations.

SUMMARY: This document withdraws

portions of the notice of proposed

rulemaking published in the Federal

Register (54 FR 9460) on March 7, 1989

and amends proposed regulations

relating to changes in family status. In

the Rules and Regulations section of this

issue of the Federal Register, the IRS is

issuing temporary regulations that

provide guidance on the circumstances

under which a cafeteria plan participant

may revoke an existing election and

make a new election during a period of

coverage. The text of those temporary

regulations also serves as the text of

these proposed regulations.

DATES: Written comments and requests

for a public hearing must be received by

February 5, 1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–243025–96),

room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions

may be hand delivered between the

hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (REG-243025–96),

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.ustreas.gov/prod/

tax regs/comments.html.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Sharon

Cohen, (202) 622–6080; concerning

submissions or to request a public

hearing, Evangelista Lee, (202) 622–

7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Q&A–8 of § 1.125–1 1 and Q&A–6(c)

and (d) of § 1.125–2 2 provide that a

participant may make benefit election

changes pursuant to changes in family

status and separation from service. The

temporary regulations set forth the

standards under which a cafeteria plan

can allow an employee to change his or

her health coverage election during a

period of coverage to conform with the

special enrollment rights under the

Health Insurance Portability and

Accountability Act of 1996, and to

change his or her health coverage or

group-term life insurance coverage in a

variety of other ‘‘change in status’’

situations. Thus, these proposed

regulations modify Q&A–8 of § 1.125–1

and Q&A–6(c) and (d) of § 1.125–2, and

clarify that the ‘‘change in family status

rules’’ in the existing proposed

regulations continue to apply to

qualified benefits (including dependent

care assistance under section 129 and

adoption assistance under section 137)

other than accident or health coverage

and group-term life insurance coverage.

Election changes continue to be

permitted where there has been a

significant change in the health

coverage of the employee or spouse

attributable to the spouses’s

employment.

In addition, the temporary regulations

provide that the rules of section 401(k)

and (m), rather than the rules in the

temporary regulations that apply to

other qualified benefits, govern election

changes under a qualified cash or

deferred arrangement (within the

meaning of section 401(k)) or with

respect to employee contributions under

section 401(m). Therefore, the proposed

regulations withdraw Q&A–6(f) of

§ 1.125–2.

Temporary regulations in the Rules

and Regulations section of this issue of

the Federal Register amend the Income

Tax Regulations (26 CFR part 1) relating

to section 125. The temporary

regulations contain rules relating to the

circumstances under which a cafeteria

plan participant may revoke an existing

election and make a new election during

a period of coverage.

The text of those temporary

regulations also serves as the text of

these proposed regulations. The

preamble to the temporary regulations

explains the temporary regulations.

Special Analyses

It has been determined that this

Treasury Decision is not a significant

regulatory action as defined in EO

12866. Therefore, a regulatory

assessment is not required. It also has

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) do not apply to these

regulations, and because the regulations

do not impose a collection of

information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Internal Revenue

Code, proposed regulations will be

submitted to the Chief Counsel for

Advocacy of the Small Business

Administration for comment on their

impact on small business.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments (a signed original and

eight (8) copies) that are submitted

timely to the IRS. All comments will be

available for public inspection and

copying. A public hearing may be

scheduled if requested in writing by any
Federal Register / Vol. 62, No. 216 / Friday, November 7, 1997 / Proposed Rules 60197

person that timely submits written

comments. If a public hearing is

scheduled, notice of the date, time, and

place for the hearing will be published

in the Federal Register.

Drafting Information

The principal authors of these

regulations are Catherine Fuller and

Sharon Cohen, Office of the Associate

Chief Counsel (Employee Benefits and

Exempt Organizations). However, other

personnel from the IRS and Treasury

Department participated in their

development.

Partial Withdrawal of Notice of

Proposed Rulemaking

Accordingly, under the authority of

26 U.S.C. 7805, § 1.125–2 Q&A–6(f) 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 March 7, 1989 (54 FR 9460) are

amended as follows:

PART 1—INCOME TAXES

Paragraph 1. In § 1.125–1, as proposed

May 7, 1984 (49 FR 19321), in Q&A–8,

Q–8 is republished and A–8 is amended

by revising the last sentence to read as

follows:

§ 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, except for

benefit elections relating to accident or

health plans and group-term life

insurance coverage, a cafeteria plan may

permit a participant to revoke a benefit

election after the period of coverage has

commenced and to make a new election

with respect to the remainder of the

period of coverage if both the revocation

and the new election are on account of

and consistent with a change in family

status (e.g., marriage, divorce, death of

spouse or child, birth or adoption of

child, and termination of employment

of spouse).

* * * * *

Par. 2. In § 1.125–2, as proposed

March 7, 1989 (54 FR 9460), in Q&A–

6, Q–6 is republished and A–6 is

amended by revising A–6(c) and (d) to

read as follows:

§ 1.125–2 Miscellaneous cafeteria plan

questions and answers.

* * * * *

Q–6: In what circumstance may

participants revoke existing elections

and make new elections under a

cafeteria plan?

A–6: * * *

(c) Certain Changes in Family Status.

Except as otherwise provided, in the

case of benefits other than accident or

health plan coverage and group-term life

insurance coverage, a cafeteria plan may

permit a participant to revoke a benefit

election during a period of coverage and

to make a new election for the

remaining portion of the period if the

revocation and new election are both on

account of a change in family status and

are consistent with such change in

family status. For purposes of this

paragraph (c) of Q&A–6, examples of

changes in family status for which a

benefit election change may be

permitted include the marriage or

divorce of the employee, the death of

the employee’s spouse or a dependent,

the birth or adoption of a child of the

employee, the termination of

employment (or the commencement of

employment) of the employee’s spouse,

the switching from part-time to full-time

employment status or from full-time to

part-time status by the employee or the

employee’s spouse, and the taking of an

unpaid leave of absence by the

employee or the employee’s spouse.

Benefit election changes are consistent

with family status changes only if the

election changes are necessary or

appropriate as a result of the family

status changes. In the case of accident

or health plans, election changes are

permitted where there has been a

significant change in the health

coverage of the employee or spouse

attributable to the spouse’s employment.

For additional rules governing cafeteria

plan election changes with respect to

accident or health plan coverage and

group-term life insurance coverage, see

§ 1.125–1T.

(d) Separation from Service. Except

with respect to accident or health plan

coverage and group-term life insurance

coverage, a cafeteria plan may permit an

employee who separates from the

service of the employer during a period

of coverage to revoke existing benefit

elections and terminate the receipt of

benefits for the remaining portion for

the coverage period. The plan must

prohibit the employee, if the employee

should return to service for the

employer, from making new benefit

elections for the remaining portion of

the period of coverage. For rules

governing cafeteria plan election

changes with respect to accident or

health plan coverage and group-term life

insurance coverage, see § 1.125–4T.

* * * * *

Proposed Amendments to the

Regulations

In addition, 26 CFR part 1 is proposed

to be amended as follows:

PART 1—INCOME TAX

Paragraph 1. The authority for part 1

continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.125–4 is added to

read as follows:

[The text of this proposed section is

the same as the text of § 1.125–4T

published elsewhere in this issue of the

Federal Register.]

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

[FR Doc. 97–29086 Filed 11–6–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 100

[CGD07–97–050]

RIN 2115–AE46

Special Local Regulations: BellSouth

Winterfest Boat Parade, Broward

County, Florida

AGENCY: Coast Guard, DOT.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Coast Guard proposes to

establish permanent special local

regulations for the BellSouth Winterfest

Boat Parade which will be held

annually during the second Saturday of

December on the waters of the Port

Everglades turning basin and the

intracoastal waterway from Dania

Sound light to the Pompano Beach

daybeacon.

DATES: Comments must be received on

or before December 8, 1997.

ADDRESSES: Comments may be mailed to

U.S. Coast Guard Group Miami, 100

MacArthur Cswy Miami Beach, Florida

33139, or may be delivered to the

Operations Department at the same

address between 7 a.m. and 3:30 p.m.,

Monday through Friday, except federal

holidays. The telephone number is (305)

535–4448. Comments will become a part

of the public docket and will be

available for copying and inspection at

the same address.

FOR FURTHER INFORMATION CONTACT:

LTJG J. Delgado, Coast Guard Group

Miami, FL at (305) 535–4409.