2015 is almost over, so it is time to remind your employees to use up any remaining money they might have left in their Flexible Spending Accounts (FSA) or Dependent Care Accounts (DCAP) before the year is over!
An FSA account may be set up as a “use it or lose it” tax-advantaged medical savings account, so if your employees don’t use it all up by the end of the calendar year, they stand to lose any remaining money you have left. It is possible that you may have implemented a grace period which allows your employees either an additional 2 ½ months to spend their FSA dollars, or that you have chosen to allow employees to rollover up to $500 into the next plan year. Remember, changes to the use-it-or-lose-it rule must be written in to your FSA plan document. A list of Items or services for which your employees can use their FSA dollars can be found in the IRS Publication 502.
A Dependent Care Account (DCAP) is set up as a “use it or lose it” tax-advantaged account to be used to reimburse for eligible daycare expenses for children 12 and under or for adult daycare expenses for a disabled spouse or IRS tax dependent. There are no grace periods or rollovers for DCAP, so your employees have to use the funds in their account before December 31, 2015. For more information on what providers and expenses qualify, please see IRS Publication 503 here.
Please feel free to This email address is being protected from spambots. You need JavaScript enabled to view it. your Fall River Account Manager if you have any questions!
