IRS adds grace period to FSA deadline
✍ Scribed by Shirley Dennis-Escoffier
- Book ID
- 102296586
- Publisher
- John Wiley and Sons
- Year
- 2005
- Tongue
- English
- Weight
- 44 KB
- Volume
- 17
- Category
- Article
- ISSN
- 1044-8136
No coin nor oath required. For personal study only.
✦ Synopsis
The IRS recently announced it would allow companies to extend the use-it-or-lose-it deadline for flexible spending plans. Notice 2005-42 announced that companies may now amend their cafeteria plans to permit participants to use any remaining plan balance within a grace period of up to 2 1 ⁄ 2 months after the end of the plan year. This change should ease the annual rush that occurs each December for calendar-year plans when participants must spend any balance in their accounts to avoid forfeiture. This new grace period is an elective provision, so employers need to carefully consider the implications before they rush to amend their cafeteria plan documents.