On December 27, 2020, President Donald Trump signed the Economic Aid to Hard Hit Small Businesses, Nonprofits and Venues Act into law. It makes temporary changes to rules governing health and dependent care flexible spending accounts (FSAs) and allows employers that sponsor the plans to provide employees with more time to use the benefits. Here is a summary of the temporary provisions.
For plan years ending in 2020, employers may permit participants to carry over any unused benefits or contributions remaining in their FSA to the subsequent plan year without limitation. For example, if the plan year ended on December 31, 2020, you may permit participants to carry over any unused balance to December 31, 2021. Before the Act’s passage, carryover amounts were allowed only for health FSAs and were limited to $550.
