Friday, November 8, 2013

Provision Changes to Flexible Spending Accounts

Last week, the Department of Treasury changed the provisions within the Flexible Spending Account regulations to allow participants to roll over a certain amount of unused funds at the end of the FSA's plan year.  The new regulation will affect current employers who offer Flexible Spending Accounts plans and for new Flexible Spending Account plans that are established in 2014.

Currently, participants who do not spend the full amount elected will lose any remaining dollars at the end of the plan year.  With the new provision, participants will be able to have up to $500 carried over into the following year's Flexible Spending Account plan year.  This provision is only permitted as long as the employer's plan does not incorporate an Extension Grace Period of more than two and a half month's.  For employer's who will begin to offer a Flexible Spending Account as a new benefit in 2014, this new regulation will allow them to carry over unused funds at the end of the FSA's plan year.

Adopting this plan provision requires a change to the current Plan Document and specific communications to employees.  If you have any questions regarding implementing this provision or the documentation requirements, please contact our office.


Thank you.