If you have a flexible spending account (FSA), have you checked the balance recently? The deadline to spend that money may be fast approaching.
An FSA is an employer-sponsored tax-free account you can use to pay for a wide range of medical services and products each year (co-pays, prescriptions, procedures, glasses and much more; see the IRS’ list here or contact your plan sponsor for details). The money you contribute to an FSA is not taxed, but there are strings attached.
Some plans have a use-it-or-lose-it policy, meaning you have to completely drain the account by the deadline or forfeit whatever is left back to your employer. Other plans will allow you to roll up to $500 over to the next year, but anything left in your FSA above that amount will also be forfeited. Your employer can choose to offer either a grace period for drawing down your balance or a rolloverThe process of transferring funds from one retirement account to another, typically without incurring a tax. benefit, but not both.
It’s a good idea to ask your plan administrator when your 2019 contributions will disappear or if you are allowed to roll funds over.
Spending deadlines vary depending on your employer, so it’s a good idea to ask your plan administrator when your 2019 contributions will disappear or if you are allowed to roll funds over. For plans that follow the calendar year, the grace period for spending last year’s FSA savings runs out by March 15 (otherwise, the grace period extends 2.5 months past the end of the plan year). Whether your deadline is sooner than that or not, start strategizing on how to use that cash—are there any medical supplies you can stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. up on? Do you have any receipts from doctor’s appointments that you could have reimbursed?
If you have any questions about your company’s flexible spending account deadlines or benefits, or what kinds of expenses qualify, please contact your wealth management team and we’ll be happy to point you in the right direction.
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