The IRS issued an Information Letter confirming that sponsors of flexible spending account plans have discretion to set their own claim submission timing deadlines.
The Letter asks if IRS rules provide a hardship exception for the late submission of a dependent care FSA claim. The IRS advises that a plan sponsor sets its own deadlines for submitting claims after the end of the plan year, and the IRS does not have authority to change the plan sponsor’s deadlines. The plan document should set forth the timeframes employees must follow to submit claims.
This guidance specifically addresses a dependent care flexible spending account plan which is not subject to ERISA. The IRS issued a Final Rule in April which extends the claims submission deadline for health care and other claims in ERISA plans. While the IRS does not set the date by which a plan requires reimbursement requests, the IRS does “toll” the submission deadlines under the new Rule for ERISA-covered plans. ERISA plans cannot require claims to be submitted until after the COVID-19 Outbreak Period ends. For more information, see our article here.
A copy of the IRS Information letter may be accessed here.