Q.- An employee wants to cancel his dependent care FSA election. He didn’t realize that the dependent care FSA worked differently from the health care FSA and he could only get out the amount he contributed. Can we allow him to cancel his account?
A.- Probably not. Flexible spending account elections must be set for the entire plan year. They can be changed only for certain events recognized by the IRS as permitting a mid-year change. Misunderstanding how the dependent care FSA works is not an IRS-approved mid-year change event.