Q.- Our Flexible Spending Account Plan Year begins March 1. We are changing payroll schedules, and it might be difficult to take the FSA contribution out of all of the 27 payrolls for the 2013 plan year. Can we take deductions for only 26 of the 27 payrolls?
A.- It would likely be permissible under the FSA rules to take the FSA contributions from 26 instead of 27 payrolls. The guidance under Code section 125 provides that a plan may specify any interval for salary reduction contributions to an FSA, so long as the interval is uniform for all participants.
You should consider, however, how the salary reduction election was communicated to employees. Were employees informed that contributions for coverage would be deducted on a pro-rata basis from each paycheck? If so, employees should be advised of the new process.