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Flexible Spending Account

Q&A: Flexible spending account use-or-lose deadlines are back after a pandemic hiatus

November 14, 2022 By Liz Weston

Dear Liz: The hospital where I work was bought out by another hospital last summer. I was in a flexible savings account at that time with my workplace. I had to enroll in a second FSA through the new medical facility. Trying to keep these two separate FSA accounts was not easy. I thought by March 31 of this year, my 2021 FSA accounts were spent. However, I recently found out I still had $700 left in one of my FSA accounts. I contacted the organization, pleading my case in regards to the midyear takeover and the difficulty of trying to keep two FSA accounts straight. No luck! Do I have any recourse?

Answer: The rules about spending FSA money were loosened after the COVID-19 pandemic hit, but it’s possible your employer didn’t opt in to those changes.

Medical FSAs, which allow employees to put aside pretax money to pay qualified healthcare expenses, have “use it or lose it” provisions that require the money to be spent within certain time frames. Normally, the deadline is Dec. 31, but employers can offer a grace period that extends the cutoff to March 15 of the following year, or allow employees to roll over a few hundred dollars ($550 in 2021 and $570 for 2022).

The federal Taxpayer Certainty and Disaster Tax Relief Act of 2020 gave employers the option of extending their spending deadlines by up to a year, or allowing their workers to roll over all the funds left in their FSAs in 2020 and 2021. Employers weren’t required to make these changes, which have since expired.

If your employer didn’t change its rules, it may not be too late, said Nitasha Kadam, a tax analyst for Wolters Kluwer Tax & Accounting. Plans can be amended retroactively to provide this relief. But the deadline is fast approaching — changes for the 2021 plan year would have to be made by Dec. 31, 2022. It’s worth asking about, although your case might be stronger if you can find co-workers in the same boat.

In any case, this is a timely reminder for other people who have money left in their FSAs: Check the deadlines, and make sure you spend the money before it’s gone forever.

Filed Under: Q&A Tagged With: Flexible Spending Account, FSA

Wednesday’s need-to-know money news

November 20, 2019 By Liz Weston

Today’s top story: 5 great hotels to book for New Year’s with points and miles. Also in the news: Why you shouldn’t open your Roth IRA at a bank, one credit score factor to check twice during the holidays, and how much you should contribute to your FSA.

5 Great Hotels to Book for New Year’s With Points and Miles
Ring in the new year for less.

Why You Shouldn’t Open Your Roth IRA at a Bank
A broker gives you more options.

One Credit Score Factor to Check Twice During the Holidays
Your credit utilization ratio matters.

How Much Should You Contribute to Your FSA?
Covering your out-of-pocket costs.

Filed Under: Liz's Blog Tagged With: credit utilization, Flexible Spending Account, FSA, miles, New Year's Eve, reward points, Roth IRA

Thursday’s need-to-know money news

November 8, 2018 By Liz Weston

Today’s top story: At what age can you ignore your credit score? Also in the news: How to keep home improvements under budget, how holiday shopping plans are being influenced by the trade war, and 5 ways to spend down your 2018 FSA.

At What Age Can You Ignore Your Credit Score?
It’s older than you might think.

How to Keep Home Improvements From Demolishing Your Budget
Upgrading for less.

Americans’ Holiday Shopping Plans Taxed by Trade War
Paying attention to goods from China.

5 Ways to Spend Down Your 2018 FSA
The clock is ticking.

Filed Under: Liz's Blog Tagged With: budget, China, Credit Score, Flexible Spending Account, FSA, holiday shopping, home improvements, trade war

Monday’s need-to-know money news

May 23, 2016 By Liz Weston

401k-planToday’s top story: Should you get an FSA? Also in the news: The best times of the year to buy a used car, saving enough for retirement, and the states with the highest rate of identity theft.

Should I Get an FSA?
The pros and cons of a healthcare spending account.

The best times of the year to buy a used car
Buying strategically.

Saved enough for retirement? Not many have
The golden years could be stressful.

The States With the Highest Rate of Identity Theft
Is yours on the list?

Filed Under: Liz's Blog Tagged With: Flexible Spending Account, FSA, Identity Theft, Retirement, retirement savings, used cars

Tuesday’s need-to-know money news

August 11, 2015 By Liz Weston

Zemanta Related Posts ThumbnailToday’s top story: How to build a credit score from the ground up. Also in the news: What happens to your Flexible Spending Account when you leave a job, financial insomnia, and how to get your spending back on track.

How to Build a Great Credit Score From Scratch
Building credit when you don’t have any.

What Happens to Your Flexible Spending Account When You Quit
Who keeps the money?

Financial Security For The Light Sleeper
Don’t let money woes keep you up at night.

8 Ways to Get Your Spending Back on Track
Getting back on the right path.

What You Need to Know About Unwanted Robocalls
How to stop the annoyance.

Filed Under: Liz's Blog Tagged With: budgets, Credit Score, Flexible Spending Account, robocalls, spending tips

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