Here is an example for Dependent Care:
- The 2019-2020 DCA account has $2,000 available today.
- Daycare starts again for their child in September 2020.
- The participant can use the $2,000 for expenses with Dates of Service from June 1, 2019 - December 2020.
- If the participant only uses, for example, $1,800 by December 31, 2020, they will forfeit the remaining $200.
Here is an example for the Rollover:
- The 2019-2020 FSA account has $2,000 available today.
- The participant is allowed to rollover $550
- The participant can use their total $2,000 up until December 31, 2020, as long as the date of service falls within June 1, 2019 - December 31, 2020.
- Or, the participant can use $1,450 up until December 31, 2020, and Rollover $550 to use for the remainder of the 2020-2021 Plan.
- If the participant only uses, for example, $1,250 by December 31, 2020, they will Rollover $550 and forfeit the remaining $200.
Finally, per the IRS, the employer is responsible for notifying your employees of any changes you make to your plan. Should you choose to adopt either of these plan amendments, please notify your employees as soon as possible.
I hope these make sense to you. Please email or call our office at (616) 791-7900 with any questions regarding the changes the IRS has made.