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Articles From Lumsden McCormick

The American Rescue Plan Makes FSAs a Little More Flexible

The act boosts the amount that companies can allow workers to deposit.

Provided by Bryan J. Staniszewski, CFP®, CPA/PFS, AIF®, MBA

For those with a Dependent Care Flexible Spending Account (FSA), there may be some good news on the horizon. The American Rescue Plan Act, signed into law by President Joe Biden, boosts the amount that companies can allow workers to deposit in their dependent-care FSAs for 2021. Here are some details to remember:

*Dependent Care Contributions: The limit on contributions to Dependent Care FSAs is now higher under the American Rescue Plan Act. For married couples filing jointly, the cap is $10,500, up from $5,000. For single filers, the limit is $5,250, up from $2,500.1

*Health FSA Contributions: Health FSA contributions are unaffected by the latest stimulus bill, meaning contributions to Health FSAs are still capped at $2,750.2

*FSA Rollovers: Employees may carry over all or some of their unused health and/or dependent care FSA funds from a plan year ending in 2020 or 2021.3

Although this may be deeply appreciated news for many, there is one caveat to keep in mind. Employers can choose whether to make any modifications to their plans under these temporary rule changes but are under no obligation to do so.4

Let me know if you’d like to chat about the most recent stimulus, FSAs, or any other topics you’re pondering. I’m always here to help.

Bryan J. Staniszewski, CFP®, CPA/PFS, AIF®, MBA, Director of Wealth Management and Planning, may be reached at 716-856-3300 ext. 175 or bstaniszewski@lumsdencpa.com

www.fslumsden.com


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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC.  Investment Advisory services offered through Avantax Advisory ServicesSM. 

Citations

1. CNBC.com, March 12, 2021

2. CNBC.com, March 12, 2021

3. Congress.gov, March 11, 2021

4. Congress.gov, March 11, 2021
 

The American Rescue Plan Makes FSAs a Little More Flexible

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Bryan joined Lumsden & McCormick Financial Services in 2012 with over 15 years of experience in investment services. Bryan delivers custom, holistic solutions that fit an individual’s entire financial situation, understanding the importance of cash flow, the role of taxes, wealth preservation, and how legacy building and overall wealth goals factor into the creation of a comprehensive wealth plan.

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