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{ 9 comments… read them below or add one }

Jijo December 4, 2009 at 10:07 PM

Do you have any idea who gets this unused money? I have no clue why would the government would make up this cruel plan to test their citizens.

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TheyCallMeCheap December 5, 2009 at 12:24 AM

The unused money stays with your employer. Remember you could theoretically take out more money than you put in under a health care FSA.

Here's what IRS Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans says:

"You must be able to receive the maximum amount of reimbursement (the amount you have elected to contribute for the year) at any time during the coverage period, regardless of the amount you have actually contributed. The maximum amount you can receive tax free is the total amount you elected to contribute to the health FSA for the year."

If you commit to contribute $1,000 during the plan year for a health care FSA, you could theoretically use $1,000 on January 1st, and quit your job on January 2nd. You may not have even been able to make any contributions to your FSA by January 2nd.

There will be some people who resign before they're able to repay the money they used and there will be people who can't use all the money they put in.

I'm not sure why our government does this to us. Maybe it's to keep us from deferring the payment of taxes. Maybe they want to deter us from maximizing our tax savings. Or maybe, they're just evil. :)

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Ben Griffiths July 9, 2010 at 2:56 AM

everyone should know about good financial planning becuse it can give you more success.*:~

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estela March 3, 2011 at 3:28 PM

If the employee is allowed to use the amount set aside for the entire year at the
beginning of the plan year, what happens if he leaves in the middle of the plan year and has used up the entire amount but only had 1/2 of it deducted from his paycheck.

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TheyCallMeCheap March 3, 2011 at 3:37 PM

He leaves the company without owing his former employer a thing. Imagine the reverse. His employer keeps the contributions he made to the FSA plan if he doesn't use the balance up before he leaves.

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Jim Hayes July 21, 2011 at 12:02 AM

Great overview of how to make an FSA election! Have you covered Dependent Care FSAs before? If not, send me an email and I can provide details for another post.

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