Earlier today, the Department of Treasury issued Notice 2013.71 that modifies the FSA “use-it-or-lose-it” provision to allow a limited rollover of FSA funds. This is GREAT NEWS for participants and employers who sponsor an FSA plan, and a positive improvement to a rule that has been opposed for many years. The highlights:
- Effective immediately, employers that offer FSA programs that do not have the “Extended Grace Period” (where expense that are incurred thru March 15 can be paid from prior year’s funds) will have the option of allowing employees to roll over up to $500 of unused funds at the end of the current 2013 plan year.
- Effective in plan year 2014, employers that offer FSA programs will have the option of allowing participants to roll over up to $500 of unused funds at the end of the plan year.
We will issue a detailed summary with an action list soon, but we wanted you to know now about this change as soon as possible as it may impact what you will want to communicate during open enrollment.