After year-end, any money left over in an employee FSA will be turned over to the employer with three small exceptions (these are are at the discretion of the employer):
- Grace Period: An additional two and a half months (until March 15th assuming a plan year that starts on January 1st) is granted to the employee for any new expenses that can be used from money in the FSA from the prior year. After the grace period, any remaining money will be turned over to the employer.
- Carryover: For 2023, employees can carry a maximum amount of $610 unused balance to the next plan year if allowed by their employer. Any additional dollars above $610 will be forfeited. Please note, the $610 maximum is in addition to the current year pre-tax contribution limit set by the IRS.
- Run-Out Period - This is the additional time, after the plan year ends, that an employee can file a claim that occurred in that plan year.
An employer can offer either a grace period or carryover, not both.