Q.- An employee is terminating employment next week. He made a full $2,500 election to our health FSA. He wants to know if he will be allowed to contribute $2,500 to his new employer’s health FSA when he starts working there in two weeks. Will he?
A.- The amount the employee will be able to defer under his new employer's FSA will depend on the terms of that employer's plan. Employers may set limits on contributions to an FSA that are lower than the IRS maximum of $2,500.
The IRS limit of $2,500 applies on an employer-by employer basis. If an employee is employed during the year by two employers that are not part of the same controlled group, the IRS rules do not require the maximum $2,500 contribution to be coordinated. The employee should be permitted to contribute to each employer's FSA to the extent permitted under the terms of each employer's separate plan. Contributions to one employer's FSA should not impact contributions to the other employer's FSA.
We suggest that he consult his own advisor for how the IRS rules impact his particular situation.
