what happens to your FSA (flex spending account) $ that your company wont give back to you?

Question

The IRS has a stupid rule that says that you have X amount of time to redeem YOUR money and after that they moniter of your account is prohibited from returning it to you. WHAT do they do with MY money when they decide to keep it?

Answer 1

1. Congress made this rule, not the IRS.
2. They do not decide (whether) to keep it. They are required to keep it, whether they want to or not. It is against the law for them to give it to you.
3. They use it to pay the expenses of running the plan.

Answer 2

They claim it as income and do whatever they wish with it. That's how the program works.

BTW, it is NOT the IRS' rule, but the LAW as passed by Congress that requires forfeiture of any balance after the end of the year.

You CAN pre-pay upcoming expenses, however. I usually just sweep the remaining balance to my dentist and have him work it off that way.

Answer 3

The company uses any forfeited money to pay for administering the plan. Usually the companies LOSE money when they offer an FSA.

The company is not doing anything wrong, this *is* how the plans were set up.