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The American Rescue Plan Makes FSAs a Little More Flexible

The American Rescue Plan Makes FSAs a Little More Flexible

| March 31, 2021
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The American Rescue Plan Makes FSAs a Little More Flexible
The act boosts the amount that companies can allow workers to deposit.

 

Provided by Peter Livingston

 

For those with a Dependent Care Flexible Spending Account (FSA), there may be some good news on the horizon. The American Rescue Plan Act, signed into law by President Joe Biden, boosts the amount that companies can allow workers to deposit in their dependent-care FSAs for 2021. Here are some details to remember:

 

*Dependent Care Contributions: The limit on contributions to Dependent Care FSAs is now higher under the American Rescue Plan Act. For married couples filing jointly, the cap is $10,500, up from $5,000. For single filers, the limit is $5,250, up from $2,500.1

 

*Health FSA Contributions: Health FSA contributions are unaffected by the latest stimulus bill, meaning contributions to Health FSAs are still capped at $2,750.2

 

*FSA Rollovers: Employees may carry over all or some of their unused health and/or dependent care FSA funds from a plan year ending in 2020 or 2021.3

 

Although this may be deeply appreciated news for many, there is one caveat to keep in mind. Employers can choose whether to make any modifications to their plans under these temporary rule changes but are under no obligation to do so.4

 

Let me know if you’d like to chat about the most recent stimulus, FSAs, or any other topics you’re pondering. I’m always here to help.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations

  1. CNBC.com, March 12, 2021
  2. CNBC.com, March 12, 2021
  3. Congress.gov, March 11, 2021

4. Congress.gov, March 11, 2021

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