Question of the Week

Posted by BAS - 02 November, 2017

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Q.- Our Health FSA has the $500 carryover feature. We have an employee who contributed $2,000 to his health FSA this year because he thought his son was getting braces in November. The son will not be getting braces until next year. Can we let him carryover the full $2,000 instead of just $500?

A.- No. One of the requirements the IRS places on a health flexible spending account plan is that funds not used during the plan year are forfeited. The IRS has approved a limited exception for a $500 carryover. Your plan will risk disqualification if you allow the employee to carry over more than $500 into the next plan year.

Topics: Healthcare FSA


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