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| Flexible Spending |
Flexible spending accounts offer employees a great way to reduce their taxable income, while at the same time paying for medical/dental expenses and/or work related elder or child-care expenses they know they'll encounter during the year.
There are a couple of catches to flexible accounts…
- The IRS requires that any unspent flexible account funds be forfeited after December 31.
- There is limited opportunity to refine your spending plan participation. Unless there is a major change in your life—marriage, divorce, birth of a child, reduction in work hours, or job loss or change by your spouse—you’re confined to depositing what you chose during the enrollment period.
Careful computations mean no wasted plan money. It does require some extra work, but most employees agree that the time spent is a small price to pay in exchange for accessible cash in tax-advantaged accounts.
For more information, you may contact the Employee Benefits and Wellness Division: Employee Benefits
You may deposit money on a pre-tax basis into one or both of the following accounts:
Health Care Account
A Health Care account allows you to direct a part of your pay, on a pre-tax basis, into a special account that can be used throughout the year to reimburse yourself for certain out-of-pocket health care expenses. Typical out-of-pocket costs for most employees include: insurance deductibles and co-payments, glasses and un-reimbursed dental work. You can deposit up to $5,000 per year into this account.
Dependent Care Account
You may have dependent children who need care so that you can work or perhaps you have an elderly parent living with you whom you claim as a dependent. You can direct a part of your pay, on a pre-tax basis, into a special account that can be used throughout the year to "pay yourself back" for certain work-related, dependent care expenses. These expenses must be incurred to enable you and your spouse, if you are married, to work. Subject to IRS rules, currently you can deposit up to $5,000 per family, per year, into this account.
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