• Turner's Tax Service
  • Contact Us
  • Directions
  • Recent Tax Updates
  • Fees and Policies
  • Forms

NEW CARRYOVER RULES FOR CAFETERIA PLANS

11/16/2013

0 Comments

 
Many employers provide flexible spending arrangements, commonly called cafeteria plans.  These plans allow employees to put money tax free into spending plans for specific purposes, such as child care and health care costs not covered by their health insurance.

Beginning in 2013, the amount an employee can put into a cafeteria plan for health care costs is $2500. 

Initially, these contributions were "use-it-or-lose-it" so an employee had to be very cautious about the amount they contributed so as to not leave anything at the end of the year.  In 2005 the "use-it-or-lose-it" rule was modified to provide a grace period.  Employers could permit employees to use amounts remaining from the previous year to pay for expenses made through March 15th of the following year.

The IRS has modified the "use-it-or-lose-it" rule once again.  Employers have the option of allowing employees to carryover up to $500 of the amount they have set aside for health care expenses from one year to the next and use that to pay for qualified expenses throughout the entire year rather than just expenses made through March 15th.  The carryover amount does not count against the $2500 contribution an employee can make each year.

Check with your employer to see if they are going to adopt the new carryover  provisions.
0 Comments



Leave a Reply.

     

    Federal and state tax laws and regulations change regularly.  As we become aware of changes, we will post them here and, if you are a client who has provided us with an email address, we will also email them to you.

    Archives

    December 2022
    July 2021
    January 2021
    December 2020
    April 2020
    March 2020
    October 2019
    January 2019
    November 2018
    June 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    July 2017
    May 2017
    April 2017
    January 2016
    June 2015
    May 2015
    July 2014
    March 2014
    December 2013
    November 2013
    October 2013
    September 2013
    February 2013
    January 2013
    August 2012
    January 2012
    June 2011
    August 2010
    January 2010
    September 2009

    Categories

    All

    RSS Feed

Powered by Create your own unique website with customizable templates.