Using a Flexible Spending Account

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Using a Flexible Spending Account

When funding your health or dependent care flexible spending account, be careful not to fund too generously, as IRS rules forbid you to carry funds over from one year to another beyond $660. Your employer may require you to spend the remainder of your funds by the end of the calendar year in which they were contributed, or may allow you a two-and-a-half month grace period after the end of the calendar year to spend saved funds.

Dependent care FSAs

If you have a dependent care FSA, you must submit receipts for qualified expenses to your FSA plan administrator. Once those are processed, the administrator will reimburse you, either through a check or direct deposit, for those expenses. IRS rules do not permit the plan to provide funds for expenses that have not yet been incurred. For health FSAs, many plans provide a credit, debit, or stored value card whereby you can access your funds on the spot for qualified expenses. If you aren’t provided with such a card, you generally must submit receipts for qualified expenses and then will be reimbursed by your plan administrator.