IRS Provides Guidance on FSA Rollover and HSA Eligibility


Enroll in an FSA with your employerOn March 28, 2014, the IRS provided Chief Council Advice concerning several questions that have been posed based on the Flexible Spending Account (FSA) rollover rule and Health Savings Account (HSA) eligibility.  While the advice has been issued directly addressing the questions, it does not constitute changes in the regulations and should not be cited as precedent.The guidance answers seven questions concerning how FSA funds can be carried forward when an HSA account is also involved.  The highlights have been listed below.

  • HSA eligible participants who have funds rolled into a general purpose FSA are not eligible to make contributions to the HSA in the new plan year.
  • Funds may be rolled from a general purpose FSA to a limited purpose FSA (if offered by the employer) to allow for contributions to be made to an HSA.
  • If a participant waives the rollover funds prior to the new plan year beginning, they may contribute to an HSA during the new plan year.

This advice comes as welcome information as employers and plan administrators work through the new territory of the FSA rollover.

The complete memorandum can be viewed at


If you have any questions about setting up a new Flexible Spending Account or changing your existing plan to offer the rollover feature, please contact us at 800.865-6543 or visit or website.