Author Topic: Dependent Care FSA - Tax Year Versus Benefit Year? Did I mess up?  (Read 329 times)

Apocalyptica602

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Hi all,

So my new employer has a dependent care FSA that I can use for my child's daycare expenses. I know the yearly tax limit is $5000 (MFJ). My employer's 'benefit year' runs June 1st through May 31st.

I joined in January of this year, and I asked HR / the DFSA rep if I am eligible to max it out this year prior to the plan year ending 5/31. They said yes, but I have to get my $5000 in before May 31st, and then I have a 3 year grace period to 'use it or lose it' in accordance with how FSA's typically work.

So I did that, as of my next pay period I'll max out at $5000, immediately reimburse myself for childcare expenses I incurred between January and now.

Then I planned on dropping my contribution back to the minimum required to max out every 12 months of payroll.

However - I just realized - doesn't that mean I've contributed the maximum ($5000) I can do in 2019? And if I continue to contribute once my company plan year ticks over June 1 I'll be violating the IRS max? I can't imagine the IRS gives a crap about my company 'plan year'.

I hope I'm not now in some awkward situation where I have to front load my contributions every January to May now going forward.

Thanks!

walkwalkwalk

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Re: Dependent Care FSA - Tax Year Versus Benefit Year? Did I mess up?
« Reply #1 on: May 17, 2019, 01:38:29 PM »
And if I continue to contribute once my company plan year ticks over June 1 I'll be violating the IRS max? I can't imagine the IRS gives a crap about my company 'plan year'.
Correct, you would be violating the IRS max if you did $5k then more after June 1. And Correct, they don't care about your company's plan year.

What I would do (assuming you'll always in the foreseeable future have up to the IRS max for dependent care FSA in dependent care expenses) is set it to max for 2019, which you will have to adjust next January to a slightly lower amount (assuming the IRS doesn't raise DCFSA limit) to max for 2019.