Spending Down Your 2014 Flexible Spending Account

The rules changed last year to soften the use-it-or-lose-it provision of medical FSAs. But employers weren’t required to make the change.

Did the law change so I don’t need to worry about spending down my flexible spending account by the end of the year?

Last year, the Treasury Department changed the rules so companies could allow employees to carry over $500 in their medical FSAs from one year to the next. But employers weren’t required to make the change. Some offer the $500 carryover, but some still offer a grace period until March 15 to use the money instead (they can’t offer both the carryover and the grace period). And some employers offer neither option, requiring you to use the money by year-end. A survey by Visa and WageWorks, which administers FSAs for employers, found that 53% of employers planned to offer the carryover in 2014. Ask your employer about its rules.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.