Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Flexible Spending Account Contributions
Old 11-19-2005, 09:26 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Flexible Spending Account Contributions

Question for smart people on the forum. My wife just started a new job. She can contribute to a flexible spending account (FSA) for the 2005 year. We have $2000 in medical/dental expenses from July that we could potentially get reimbursed out of her FSA if we contributed $2000 into the FSA. The FSA is use it or lose it; if we can't get reimbursed for the $2000 we spent before she started the job and made the FSA contribution, we lose the money (except what we can spend by the end of the year).

The question is whether an otherwise qualified expense that would normally be reimbursed by an FSA can be reimbursed if the expense was incurred prior to starting and funding the FSA?
__________________

__________________
justin is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Flexible Spending Account Contributions
Old 11-19-2005, 10:26 PM   #2
Recycles dryer sheets
 
Join Date: Oct 2004
Posts: 260
Re: Flexible Spending Account Contributions

Don't know for sure but my guess would be no reimbursement for expenses incurred prior to starting the job and making the FSA contribution.

Why bother contributing $2000 into an FSA when the year is almost over?

I would get a definite answer to your question or the $2000 contributed into the FSA from job starting time to end of year is unlikley to be utilized.
__________________

__________________
GTM is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-20-2005, 06:50 AM   #3
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Re: Flexible Spending Account Contributions

I really doubt it. Ours is set up to put a declaration in oct/nov. for the NEXT year.
__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-20-2005, 11:32 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Flexible Spending Account Contributions

Quote:
Originally Posted by GTM
Why bother contributing $2000 into an FSA when the year is almost over?
If we could use the $2000 from the FSA for the medical expenses already incurred a few months ago, it would save us ~$500 in taxes. On the other hand, I don't want to risk losing $2000 if the previously incurred expenses end up being un-reimbursable. I'm fairly certain we won't spend any where near $2k on medical expenses before year end, barring an emergency.

I thought contributing this money to the FSA would be a quick way to save $500 in taxes, if we can do it.
__________________
justin is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-20-2005, 11:52 AM   #5
Recycles dryer sheets
 
Join Date: Mar 2004
Posts: 124
Re: Flexible Spending Account Contributions

I would check with the company plan administrator, it has rules plus it is also governed by IRS regulations.*

Quote:
Originally Posted by maddythebeagle
I really doubt it. Ours is set up to put a declaration in oct/nov. for the NEXT year.
Ours was set up this way too.* You don't want to waste $2000 (or whatever $2000 less your tax saving would be).

jj*
__________________
too cheap to even use dryer sheets - never mind recycle them!
jj is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-21-2005, 10:51 PM   #6
Full time employment: Posting here.
 
Join Date: Dec 2004
Posts: 714
Re: Flexible Spending Account Contributions

Ask your HR department, or call the administrator. I don't know if the code or reg's for IRC Section 125 lay this out, but I'd bet a nice lunch this won't fly ... I believe the expenses must be incurred after you begin contributing to the FSA.

But it will be wise to use this to the max next year ... very helpful plans. Best of luck.
__________________
Craig is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 07:03 AM   #7
Full time employment: Posting here.
cj's Avatar
 
Join Date: Jun 2005
Posts: 517
Re: Flexible Spending Account Contributions

And you all may already know this but some people here don't: you can use the FSA money for over-the-counter products like asperin, antacids, cold medicine, etc. A lot of people overlook this. It adds up over time!

CJ
__________________
cj is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 07:10 AM   #8
Recycles dryer sheets
 
Join Date: Oct 2003
Posts: 175
Re: Flexible Spending Account Contributions

I am quite sure that expenses have to be incurred while you are contributing to the HSA. One time when I had left an employer just days ago and was still covered by their medical plan, I had some medical expenses. However, since I was not actively contributing to their plan any more, I could not use the money in my account to get reimbursed. When I started with a new employer, I could not use my FSA for those expenses either because they were incurred before I started contributing to their plan. Check with your HR rep to make sure.

Vicky
__________________
vic is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 08:04 AM   #9
Full time employment: Posting here.
cj's Avatar
 
Join Date: Jun 2005
Posts: 517
Re: Flexible Spending Account Contributions

Vicky - that's interesting. In 1996, I left a job at the end February. I had signed up to put $240 per year ($20 per month) in the FSA. So at the end of February, I had only put in $40, but I was told I was entitled to use the entire $240, which I did! I thought that was some kind of law. But I probably submitted the receipts before I left the company. I am planning to take advantage of that the same way next year, when I ER in May.

CJ
__________________
cj is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 08:43 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Flexible Spending Account Contributions

The question is now moot: HR said it is a no go. Only medical expenses incurred after the first day of employment can be reimbursed by the FSA. Now, on to figuring out a different way to screw the taxman out of his hard earned money.


__________________
justin is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 08:50 AM   #11
Recycles dryer sheets
 
Join Date: Oct 2003
Posts: 175
Re: Flexible Spending Account Contributions

Quote:
Originally Posted by cj
Vicky - that's interesting. In 1996, I left a job at the end February. I had signed up to put $240 per year ($20 per month) in the FSA. So at the end of February, I had only put in $40, but I was told I was entitled to use the entire $240, which I did! I thought that was some kind of law. But I probably submitted the receipts before I left the company. I am planning to take advantage of that the same way next year, when I ER in May.

CJ
I filed all the receipts and they bounced with a message that this occured outside of the eligible period (was hoping it slipped through). You are lucky that that went through. I just left another employer where I was putting in $240 per year ($20 per month). They only reimbursed me for $200 which is what I put in for the year.

Vicky
__________________
vic is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 09:10 AM   #12
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: Flexible Spending Account Contributions

If you leave employment you can COBRA your FSA if you have money in your account you haven't used. But you need to elect COBRA coverage. EDIT: I know this is the case for a few plans I have dealt with but I don't know if this is a COBRA rule applicable to all plans.

Also, as Vic noted, you can draw "in advance" from an FSA. If you plan to put $100 per month in the account for the year, but spend $1000 in January, you can get the entire $1000 back right away, even though you haven't contributed the entire amount yet. This means that if you leave work in February, you will have taken out more than you paid in. Employers just live with that risk.

EDIT: You can't take out money in advance from a dependant care account. You only can for the medical account.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 09:54 AM   #13
Full time employment: Posting here.
cj's Avatar
 
Join Date: Jun 2005
Posts: 517
Re: Flexible Spending Account Contributions

Quote:
Originally Posted by Martha
If you plan to put $100 per month in the account for the year, but spend $1000 in January, you can get the entire $1000 back right away, even though you haven't contributed the entire amount yet.* This means that if you leave work in February, you will have taken out more than you paid in.* Employers just live with that risk.

I think that's what happened with me.* Employers live with the risk, but they also have LOTS of employees who leave money on the table at the end of the year.* So I don't feel too sorry for them!

CH
__________________
cj is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 03:58 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Flexible Spending Account Contributions

Does the money forfeited in an HSA revert to the employer or to the plan administrator (such as an insurance company)?
__________________
justin is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 04:01 PM   #15
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: Flexible Spending Account Contributions

Quote:
Originally Posted by justin
Does the money forfeited in an HSA revert to the employer or to the plan administrator (such as an insurance company)?
Under our plan it reverts to the employer. We give it to the United Way.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 04:05 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Flexible Spending Account Contributions

Quote:
Originally Posted by Martha
Under our plan it reverts to the employer. We give it to the United Way.
I guess it is plan specific. I want to say my ~25 employee employer's plan has the money forfeited to the plan administrator, presumptively to cover plan administration costs?? Seems like a conflict of interest though, since the plan administrator also approves/denies claims on the FSA.
__________________
justin is offline   Reply With Quote
Re: Flexible Spending Account Contributions
Old 11-22-2005, 05:23 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,913
Re: Flexible Spending Account Contributions

Quote:
I want to say my ~25 employee employer's plan has the money forfeited to the plan administrator, presumptively to cover plan administration costs?? Seems like a conflict of interest though, since the plan administrator also approves/denies claims on the FSA.
Ahh.. that explains why my husband couldn't get the administrator to pay out. He resigned the program and shared his opinion with others.
__________________

__________________
Duck bjorn.
Brat is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Automatic payments from a money market (savings) account a FIRE and Money 4 04-07-2007 01:14 PM
Flexible Spending Accounts - Child and Dependent Care justin FIRE and Money 5 10-24-2006 04:19 PM
Flexible Spending Accounts (FSAs) azanon Young Dreamers 39 09-19-2006 03:14 PM
endowment method of retirement spending starboardtack FIRE and Money 31 06-21-2006 07:50 PM
Health Savings Account MooreBonds Other topics 3 12-30-2004 05:19 AM

 

 
All times are GMT -6. The time now is 06:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.