I read that the contribution limit for flexible spending accounts is going to be reduced to $2,500 in 2013. My employer has been giving us until March 15 of the following year to use up our FSA money. Will that grace period still apply, or will I have to use up all of the 2012 money by December 31?
You’re right that annual contributions to medical FSAs will be limited to $2,500 starting in 2013 (down from $3,000 or $4,000 with some employers), but people whose employers give them until March 15 of the following year to use up the money in their accounts will still have the extra time to spend it. Most employers offer this grace period, so you won’t need to scramble to use up the money allocated in 2012 before the end of the calendar year.
That means January 1 to March 15 will continue to be a sweet spot for FSAs. Not only will you be able to use up any money remaining in your account from 2012, but you’ll also be able to use the full amount you plan to contribute to your FSA in 2013 (up to $2,500) anytime after January 1, even if you haven’t actually contributed the money from your paychecks yet. Keep this FSA sweet spot in mind if you’re planning a medical procedure and you’ll still have money left over in your account -- especially since early 2013 is the last chance you’ll have to benefit from the larger contribution limits from 2012.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For more information about upcoming changes from the health care reform law, see Your Health Care: What’s Next. And for more information about how you can use your FSA money, see our 7 Smart Uses for Your Flex-Account Money slide show.
-
Black Friday Deals: Are They Still Worth It in 2024?Is Black Friday still the best day for deals? We share top tips for smart holiday shopping.
-
Nine Expert Tips for Becoming a Successful Financial AdviserBe someone your clients can trust and learn to lean on for some of their most personal decisions.
-
It’s Not Too Late to Boost Retirement Savings for 2018retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
When You Can Expect to Receive Your Tax Refund
taxes The quickest way to receive your tax refund is to file electronically and have the money directly deposited into your bank account.
-
How a Move Can Change Your 529 Plan Tax Deduction
529 Plans The tax deduction you get for contributing to your state’s 529 plan can disappear if you move to another state.
-
Tap an IRA Tax-Free With an HSA Rollover
IRAs You can convert tax-deferred money in a traditional IRA into tax-free cash by rolling it over to a health savings account and using it to pay for medical bills.
