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 Joseph Biden, boosts the amount that companies can allow workers to deposit in their dependent-care FSAs for 2021. Here are some details to remember:
As we have said many times before, rollovers of Flexible Spending Accounts can ultimately function like a Roth IRA for medical bills. It does not pay to skimp on filling the account so long as rollovers are permitted.
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.2
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. __________________________
1. CNBC.com, March 12, 2021
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