Amend Your Cafeteria Plan Now
To Allow for a $500 Rollover
The IRS has announced that Cafeteria Plans (also known as 125 Plans, FSAs and Flexible Spending Accounts) can permit up to $500 to be “rolled over” into the following year – softening the “use it or lose it” rule that had been the hallmark of these accounts.
In order to allow for this rollover, a plan has to be amended.
Items to Consider
- To take advantage of the rollover, your plan must be amended.
- If your plan provides for a “grace period” allowing the account balance for one plan year to be spent in the first few months of the following year, this $500 rollover cannot be used. You may want to amend your plan to eliminate the grace period; if so, the amendment to remove this provision would have to be done by year end.
- The rollover is limited to $500 each year and cannot be accumulated.
- Contact your provider or administrator immediately if you want to implement this change for the 2013 Plan Year.
- If your Cafeteria Plan was drafted by Strauss Troy, and you have not received an e-mail, please contact Claudia Allen at firstname.lastname@example.org or 513-629-9462.
- If you need assistance amending your Cafeteria Plan, or if you have questions, contact Claudia.
- Click here for a copy of IRS Notice 2013-71.