IRS Makes Changes To The “Use-It-Or-Lose-It” Rule For FSAs
BusinessPlans, Inc. – myCafeteriaPlan® today announced the IRS has amended the “Use-It-Or-Lose-It” rule in Notice 2013-71 to allow for the rollover of a portion of unused Flexible Spending Account (FSA) funds to the new plan year.
“This is an amazing time to participate in an FSA”, according to Craig Schrolucke, VP Operations & Innovations at BusinessPlans, Inc.. “This long-awaited update provides participants with the confidence to elect to participate in the benefit without the risk that they will lose all of their unclaimed money.”
The IRS notice includes the following changes:
- Starting today, employers offering FSA programs that do not include a grace period can offer a “rollover” of up to $500.
- Any rollover funds are to be added to participant elections, but not counted towards the $2,500 maximum FSA election amount.
- Employers do not have to offer the rollover. Nor do they have to offer the full $500 maximum rollover amount, however offering this option should allow participants the flexibility they need to plan for and use their annual election.
- Effective October 31, 2013, employers are able to amend their plan documents and provide an option for either a grace period or allow employees to roll over up to $500 of unused FSA funds at the end of the 2013 plan year and for plan years going forward.
Mr. Schrolucke goes on the explain, “Along with the user-friendly web portal and mobile app provided to participants by BusinessPlans, Inc.- myCafeteriaPlan, this new change enhances the benefit employees will experience by participating in an FSA.”
BusinessPlans, Inc. – myCafeteriaPlan, continually receives updates on the current regulations and changes in the industry and works to make sure its clients are kept up-to-date on this information.
What is a Flexible Spending Account (FSA)?
An FSA is a benefit provided by an employer which allows employees to contribute a certain amount of their gross income to a designated account or accounts before taxes are calculated. Employees can be reimbursed throughout the plan year or claim period as they incur the expenses. An FSA plan allows employees to reduce their gross income, thereby reducing the amount they pay in Federal, Social Security and some State taxes – a savings of between 25% and 40% of every dollar they contribute to the plan.
About BusinessPlans, Inc. Located in Miamisburg Ohio for more than 25 years, BusinessPlans, Inc. has been building relationships with companies throughout the U.S. by offering pre-tax employee benefits, COBRA administration and communication solutions through their three divisions:
myBenefitStatements – Charts, graphs and tables are just a few of the ways myBenefitStatements personalizes employee total compensation statements. However, myBenefitStatements is more than just a total compensation statement provider – it is a one-stop provider for customized employee communications! www.mybenefitstatements.com myCafeteriaPlan® – myCafeteriaPlan professionals help to design a plan tailored to company needs. Whether a company is looking for a simple Premium Only Plan, a Flexible Spending Account, a Medical Reimbursement Plan, Retiree billing, a Health Reimbursement Arrangement, Health Savings Account or a Qualified Transportation Plan, clients and participants will receive responsive, reliable and knowledgeable administrative services. www.myCafeteriaPlan.com
myCobraPlan – As a comprehensive COBRA Administrator, myCobraPlan provides clients and participants peace of mind about COBRA eligible benefits. myCobraPlan focuses on the administrative details, allowing clients time to focus on mission critical projects. www.myCobraPlan.com