BillM223
Expert Alumni

Deductions & credits

Ask the HR person to reread the IRS Notice. Specifically, on page 9:

"Specifically, an employer, in its discretion, may amend one or more of its § 125 cafeteria plans to permit employees to apply unused amounts remaining in a health FSA or a dependent care assistance program as of the end of a grace period ending in 2020 or a plan year ending in 2020 to pay or reimburse expenses incurred for the same qualified benefit through December 31, 2020."

 

If your calendar-year 2019 dependent care plan had a grace period, when did it end? March 15, 2020, right? This is exactly what the underlined portion above is referring to.

 

Perhaps your dependent care FSA is not on a calendar year?

 

Also note that the IRS allows the employers to modify your Section 125 dependent care FSA - it does not require the employer to do so.

 

Of course, the Notice specifically states that you can use these funds from the extended grace period for expenses incurred in 2020, not 2019. For most taxpayers, however, this is likely not a problem in that they will have plenty of expenses in 2020 to reimburse. 

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