The Internal Revenue Service issued some guidelines on the $2,500 cap imposed on health care flexible spending accounts as part of the Patient Protection and Affordable Health Care Act.
The IRS also says it may modify the “use or lose” rule that says plan holders must forfeit unused FSA contributions at the end of the year. They are requesting comments.
The IRS guidelines will provide some clarity for employers and for administrators of tax-advantaged accounts as they plan for the new rules to take effect next year.
The full IRS document can be found here, but here are a few important guidelines to note:
• Guidance is effective for the plan year and not the taxpayer’s tax year.
• It is effective for plan years starting on or after Jan. 1, 2013. It does not apply for plan years that begin before 2013.
• Employer contributions do not count toward the $2,500 limit.
• Any grace period amounts from 2012 carried into 2013 do not count toward the limit.
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