U.S. Internal Revenue Service building in Washington, D.C. May 14, 2013. (Photo: Diego M. Radzinschi/THE NATIONAL LAW JOURNAL)
As part of its ongoing response to the COVID-19 outbreak, the IRS has released new guidance (Notice 2020-29) providing temporary increased flexibility with respect to mid-year election changes for cafeteria plans during the 2020 calendar year.
Notice 2020-29 also provides increased flexibility with respect to grace periods that will allow participants with unused amounts in their health or dependent care flexible spending accounts (FSAs) to apply those amounts to expenses incurred through December 31, 2020.
Generally, employers may adopt the changes immediately — in some cases retroactive to January 1, 2020 — so long as the plan is amended by December 31, 2021.
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