“Use-it-or-lose-it” Rule Relaxed for Health FSAs

Posted on 04.03.14

“Use-it-or-lose-it” Rule Relaxed for Health FSAs

Flexbile Spending Accounts - Richmond CPA Firm

 

Last fall, the IRS modified the “use-or-lose” rule for health flexible spending arrangements (health FSAs) in order to allow, at the plan sponsor's option, participating employees to carry over up to $500 of unused amounts remaining at year-end. Previously, any amounts that weren't used by year-end would be forfeited. The IRS emphasized that the plan sponsor can specify a lower amount as the permissible maximum carryover amount, or it can decide to not allow any carryover at all.

Sources: Checkpoint; Image, Drucker & Scaccetti.