Q.- May we let an employee change his Dependent Care FSA election now that he is under a stay-at-home order?
A.- Yes, if allowed by the terms of your plan. The IRS permitted election change rules allow a participant to increase or decrease an annual FSA election due to a significant change in the cost of a dependent care provider. If the employee is no longer paying for care, or if the employee hired alternative care for his child, he is allowed to decrease or increase his annual Dependent Care FSA contribution election, accordingly. Note that if he stops participating in the plan altogether, he will not be able to come back into the plan for the remainder of the plan year, unless he experiences a mid-year enrollment event. If the employee anticipates incurring eligible expenses at a later date, he may wish to decrease contributions instead of cancelling participation altogether.
