Planning Briefs
More Flexibility Allowed In Flex Spending Accounts
Published Monday, March 24, 2014 at: 7:00 AM EDT
Despite the name, "flexible spending accounts" (FSAs) haven't offered enough flexibility to suit some employees. But now the tide may be turning.
With an FSA, you can elect to allocate part of your salary to a special account for health care or dependent care expenses. Your contributions to the spending plan are made on a pre-tax basis and there's no tax on withdrawals to pay for eligible expenses.
Sounds like a good deal, right? However, a "use-it-or-lose it" rule for FSAs often has discouraged participation. Under this rule, you must forfeit any funds remaining in the account at the end of the year.
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