Find Out Whether Your Flexible Spending Account Can Roll Over

(Sarah)

A flexible spending account is a handy tool that lets you put aside pre-tax money for medical expenses that aren’t covered by insurance. It lowers your income tax bill and means that you have money set aside for dental care and contact lenses. The problem with FSAs is that money in the account disappears at the end of the year, which is not necessarily December 31. Starting in 2013, though, there has been a little-known exception to that.

You can’t carry over the entire balance from year to year, but you can carry over $500. That’s at least enough to keep you from rushing to get new glasses on December 28. A growing number of employers are switching over to the rollover model, even though employers get to keep any money in their employees’ FSAs at the end of the year. (Employers often contribute money to the accounts, so that isn’t as terrible an idea as it sounds like at first.)

One benefits administrator pointed out to Bloomberg that letting workers keep their FSA balances actually saves companies money, since using more money from the accounts cuts down on the employer’s portion of payroll taxes, too.

One Simple Thing Companies Could Do to Save Workers a Fortune in Taxes [Bloomberg]

by Laura Northrup via Consumerist