IRS guidance is out regarding $2500 limit for Health FSAs. More specifically guidance indicates that “taxable year” refers to the plan’s “plan year”; therefore, the rule will not affect any plans beginning prior to January 1, 2013 and fiscal plan years will not be impacted until the first plan year beginning on or after January 1, 2013. THIS IS GREAT NEWS!!!!! Also, you have until the end of the CALENDAR YEAR 2014 to amend your plan. Other tidbits from the guidance:
- Unused amounts carried over during a grace period are not counted towards the 2500 limit.
- Comments are requested regarding use or lose guidance.
Source: Alston & Bird (5/30/2012)