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.
