Know Whatâs Inside FLEXIBLE SPENDING ACCOUNT (FSA) OVERVIEW. However, they didnât allow us to make any flexible spending changes in 2021. Trying to figure out 2019 dependent care fsa rules Weâve implemented maximum level ⦠The Internal Revenue Service (IRS) recently released Notice 2020-29 and Notice 2020-33 which provide substantial changes to Cafeteria Plans, Health Flexible Spending Accounts (Health FSAs) and Dependent Care Assistance Programs (commonly referred to as Dependent Care FSAs).. Employers may amend their plan to allow for an extended grace period of up to 12 months for plan years which otherwise end in 2020 or 2021. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, contains important provisions that affect Flexible Spending Accounts (FSAs). This is not an election that rolls over from the prior year. On December 21, 2020, Congress passed a COVID-19 stimulus bill (âbillâ), which contains significant changes to health flexible spending arrangements (FSAs) and dependent care (DC) FSA rules for the 2020 and 2021 plan years. Commonwealth of Virginia. Employers who took the IRS up on this guidance are allowed to direct 2019 unused balances towards 2020 childcare expenses up until December 31, 2020. However, if you did not find a job and have no earned income for the year, your dependent care costs are not eligible. New FSA rules from the IRS: Some Considerations. If you want to contribute to a Dependent Care FSA for 2020, you must make an election during Open Enrollment or when you are a new hire. A Dependent Care FSA (DCFSA) is used to pay for childcare or adult dependent care expenses that are necessary to allow you and your spouse, if married, to work, look for work or attend school full-time. For more information, refer to www.FSAFEDS.com. 2020-2021 PLAN YEAR . Plans with grace periods ending in 2020 â a grace period is a period of time up to 2½ months âafterâ the end of the plan year where DCFSA participants may incur and be reimbursed for dependent care expenses. The Savings Power of This FSA. A Dependent Care FSA, sometimes called a Dependent Care Assistance Plan or DCAP, is a pre-tax benefit account offered by your employer and used to pay for qualified, out-of-pocket dependent care expenses like your nannyâs wages. Much like a workplace retirement plan, this helps to reduce your total taxable income, meaning you may pay less overall taxes as a result. This past week, the IRS has provided two notices (IRS Notice 2020-29 and IRS Notice 2020-33) related to health flexible spending accounts and dependent care flexible spending account plans, commonly referred to as health FSAs and DCAP plans.Many employers and employees have been hoping for, or even expecting this type of ⦠The Dependent Care FSA, administered by Alight (through Alight Smart Choice Accounts), follows the same general pre-tax rules as a Health Care FSA. Under the Taxpayer Certainty and Disaster Tax Relief Act of 2020, however, these rules have changed (rules which also apply to Dependent Care FSAs, which are similar plans that benefit an employeeâs dependents).Per the legal news site, JD Supra, FSA holders can take advantage of these changes: Extended carry-over and grace periods for 2021 and 2022. Here's a handy list of eligible expenses to review, download, or print out for future reference. 69.05.302.1 A (X/20) CONTENTS. getty. 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