The American Rescue Plan Makes FSAs a Little More Flexible
The act boosts the amount that companies can allow workers to deposit.
Provided by American Financial Advisors
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 us know if you’d like to chat about the most recent stimulus, FSAs, or any other topics you’re pondering. We are always here to help.
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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
