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Distributed November 1, 2013
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| IRS Issues New Health FSA Guidance |
| Yesterday, the IRS issued two new sets of guidance related to health flexible spending arrangements (FSAs): |
- Revenue Procedure 2013-35 dictates that the employee contribution limit of $2,500 will remain unchanged for 2014 plan years.
- Notice 2013-71 introduces major changes to the current "use-or-lose" rule, which results in the forfeiture of any unused funds at the end of each health FSA plan year. Under the new rule, employers may allow participating employees to carry over unused funds up to $500 to the next plan year, assuming the employer’s plan does not also include the grace period extension.
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| As always, we will carefully review this new guidance and provide a detailed breakdown of the guidance as well as the impact to employers and plan participants in the near future. We’ll send this information to you by email as soon as it is available. |
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