Give employees a grace period to spend FSA dollars — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Give employees a grace period to spend FSA dollars

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in Human Resources

If you allow employees to pay for health- and dependent-care expenses through a tax-advantaged flexible spending account (FSA), you can now give them an extra 21/2 months to spend the money.

Under current "use it or lose it" rules, employees must forfeit any dollars set aside in their FSAs if they don't spend the money on eligible expenses by the end of the plan year. A new Treasury Department ruling gives employers the option of amending their cafeteria plans to allow employees to use this 21/2-month FSA-spending grace period. (Notice 2005-42)

Read the ruling at /press/releases/js2456.htm.

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