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IRS 2020 FSA Plan Year Rule Change
IRS 2020 FSA Plan Year Rule Change
Intro
Under recent Internal Revenue Service (IRS) guidance, employers are allowed to amend certain 2020 Flexible Spending Account (FSA) plan year rules. The State of Michigan has adopted the following provisions that will allow FSA participants to take advantage of previously unused funds from the 2020 FSA plan year:
- All unused funds from the 2020 plan year will carry over to 2021 for both Health Care and Dependent Care FSAs for employees who had an active account on December 31, 2020 and either did not enroll for the 2021 plan year or are actively enrolled in the 2021 plan year. Normally the Health Care FSA carryover limit is $550 and there is no carryover for Dependent Care FSAs, but IRS provisions have allowed this temporary change for the 2020 plan year. These funds can be applied to eligible 2020 expenses submitted by March 31, 2021 or can be applied to eligible expenses incurred during the 2021 plan year (and through the corresponding grace period of March 15, 2022 for the Dependent Care FSA).
- A temporary increase to the maximum age limit for qualified dependents under a Dependent Care FSA, for employees who enrolled in the 2020 Dependent Care FSA by January 31, 2020. Eligible employees may use any remaining funds in their 2020 Dependent Care FSA for qualifying expenses incurred for their dependent who turned age 13 during plan year 2020 up until that dependent turns age 14.
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Do I have to do anything to initiate the temporary unlimited carryover for my 2020 plan year Health Care FSA or Dependent Care FSA?
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How does my Health Care FSA Card work in regard to the temporary unlimited carryover?
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How does the run-out period work for the 2020 FSA plan year?
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How do the 2020 plan year rule amendments affect my remaining Dependent Care FSA balance?
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How do the 2020 plan year rule amendments affect my remaining Health Care FSA balance?
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How do the 2020 plan year rule amendments affect the dependent age limit for Dependent Care FSAs?
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If I have questions about the 2020 FSA plan year amendments, who should I contact?
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Is my dependent who turned age 13 in plan year 2021 considered a qualified dependent under my Dependent Care FSA?
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Is the amendment to the unlimited carryover rule for Health Care FSA and Dependent Care FSA permanent?
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When will these 2020 plan year FSA amendments take effect?