Flexible Spending Accounts: Employee
How Much to Place in a Flexible Benefits Plan
After reviewing the list of qualified expenses, try to determine how much you might spend on these expenses during the next plan year. Be conservative in your estimates as any monies that remain in the plan will be forfeited.
The Rollover Options
The new FSA ruling means that the risk of losing your FSA healthcare contributions at the end of the year is reduced. You are now able to roll over up to $500 into the following plan year. Plus, the FSA rollover provision eliminates the mad scramble at the end of the year to spend remaining FSA funds.
The “Use it or Lose it” Rule
Remember the important “use it or lose it” rule when deciding how much to place in your account: If you contribute dollars to a reimbursement account and do not use all of the monies you deposit, you will lose any remaining balance in the account at the end of the plan year.
Once enrolled, you may not change
To comply with IRS regulations, you may only make a change in your election at the beginning of each plan year. This means you may not make a change in your elections after the open enrollment period, unless you experience a family status change. Examples include marriage, divorce, birth, adoption, death, loss of spouse’s employment, etc.
Social Security Benefits
Any reduction in your taxable pay for Social Security purposes may also lead to a reduction in your Social Security benefits. For most employees, the reduction in Social Security benefits will be insignificant compared to the value of paying lower taxes today.
Adoption Account Benefits
This account is subject to FICA taxes. You save only federal and state income taxes.