IRS to Allow Health FSA Carryovers

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11_08_2013_175wEffective immediately, the Internal Revenue Service (IRS) has announced that it will relax rollover rules for health flexible spending accounts (FSAs).  Funds in these accounts may be used for qualified medical expenses such as prescription drugs. Participants will now be able to roll over $500 to the next year. This limit is annual and not cumulative; thus, a participant may not roll over more than $500 each year. 
Since this is immediately effective, plan sponsors may opt to amend their 2013 plans to allow for rollovers for this plan year. For plan sponsors who already provide an option of a two-and-a-half month grace period, this news will require a choice of benefit for the plan sponsor. Plan sponsors are limited and may either offer a grace period or a rollover option.

Posted by Roshana Devkota at 11/20/2013 03:45:22 PM |