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Flexible Spending Account

Yesterday, the Department of Treasury announced a major policy change that will impact Flexible Spending Account (FSA) plans. In what is being hailed as a hugely positive development for administrators, employers, and FSA participants, the Treasury has modified the “use it or lose it” provision to allow for a limited rollover of FSA funds.

Details are as follows:

  • Effective for the 2014 plan year, employers will have the option to allow FSA plan participants to roll over up to $500 of unused funds at the end of the plan year.  
  • Effective immediately, employers with an FSA plan that does not include a grace period will have the option to allow current FSA plan participants to roll over up to $500 of unused funds at the end of the 2013 plan year.   

The new guidance, as issued by the IRS, can be found here.

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