The Internal Revenue Service (IRS) says the new $2,500 cap on workers' annual flexible spending arrangement (FSA) contributions may make the much-hated use-it-or-lose-it rule obsolete.
The IRS created the use-it-or-lose-it rule in the first place to keep a high-paid worker from abusing the program by using an FSA to defer paying paying taxes by feeding a large amount of salary into the FSA, officials say in IRS Notice N-12-40.
Now that the Patient Protection and Affordable Care Act of 2010 (PPACA) has set a relatively low limit on annual contributions, the IRS might be able to provide at some administrative relief, officials say.
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
