Monday, March 28, 2011

Use it vs Lose it

The major benefit of Flexible Spending Accounts (FSAs) is that contributions go in pre-tax, and eligible withdrawals come out tax-free. The major downside is that money left in the account at the end of the year is forfeit, which can discourage folks from participating in them.

A new bill, HR 1004, seeks to ameliorate this problem by allowing folks with unused balances to "cash out" at the end of the year (albeit with some tax penalties, which is fair).

Since ObamaCare© caps the amount at risk (ie the maximum contribution) at $2500, the sponsors of the bill believe that more folks will be willing to take a chance, driving up participation levels.

What say you?

[Hat Tip: National Underwriter]

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