IRS Allows Annual Carryover of Unused Health Flexible Spending Account Balances.
The IRS has revised its “use it or lose it” rule for health flexible spending accounts (FSAs) to allow employees to carryover up to $500 of their unused account balances instead of forfeiting those funds at the end of the plan year. Plans that allow carryovers cannot also provide a grace period. To use the new carryover option, plan sponsors must amend their health FSAs to allow carryovers before the last day of the plan year in which the new rule will take effect. Special rules apply to amendments for plan years that begin in 2013.
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