Dependent Care Flexible Spending Account
- Issue Date: August 1, 2002
- Primary Contact: Director of Human Resources
- Responsible Member of Directorate: President and Director
- Responsible Office: Human Resources
The Institution offers a plan
for an eligible employee to establish an account from which s/he
can be reimbursed for eligible dependent
care expenses with pre-tax dollars. The account is set-up with
reductions of the participating employee's
pay. Pre-tax salary reductions reduce income and FICA taxes. However,
reduction in FICA wages may mean a small reduction in social security
A. An employee in regular status, scheduled
to work more than 20 hours per week, is eligible to participate.
Participation must be for a full year, starting on January 1.
A newly eligible employee has 30 days in which to elect to participate.
Otherwise, an employee must wait until the next Open Enrollment
period to elect to participate.
B. To set up a Dependent Care Reimbursement Account,
a participant must have:
1.at least one child under age 13, or
C. If the participant is married, the spouse must
2.an adult family member who is dependent on
the participant because of a physical or mental disability
and spends at least 8 hours a day in the participant's home.
2.a full-time student, or
A. Each eligible employee can set aside
up to $5,000 per year (or the lesser of $5,000 or the earned income
of the lower-paid spouse). The limit for a married person filing
separately is $2,500. Pre-tax salary reductions (contributions
to an account) are prorated over the remaining pay periods in
B. Reimbursement requests are submitted to Human
Resources. Eligible expenses are reimbursed up to the amount
that has been deposited into the account. Excess expenses are
carried over until there is enough money in the account to cover
C. A participant has until March 31 after the
calendar year ends to submit reimbursement requests. As required
by the IRS, if the total reimbursement requests are less than
the amount of the contributions to the account, the balance
D. Generally, the salary reduction amount may
not be increased, decreased, stopped or commenced during the
year. The election may be amended or revoked on January 1st
of each year, or when there is a change of family status (called
a "Life Event"). The amount of the salary reduction must be
deducted from the employee's pay through December 31 of each
year unless a change in status occurs.
E. A Life Event is limited to:
1.the marriage or divorce of the employee,
G. Request for a change must be made within 30 days
of the qualifying Life Event. Failure to notify Human Resources
within 30 days of the Life Event will prohibit the employee from
becoming a participant until the next calendar year, or until
another Life Event occurs.
2.birth or adoption of a child,
3.disability or death of the employee's child
or spouse, or
4.change in employment status by the employee
or the employee's spouse.
H. Depending on household income, it may be advantageous
to use the Federal Dependent Care Tax Credit instead of the
Reimbursement Account. Consult your tax advisor for guidance.
you require assistance in the interpretation of this procedure,
please contact your Benefits Specialist.
Last updated: February 8, 2010