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 benefits.
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.III. Participation
B. To set up a Dependent Care Reimbursement Account, a participant must have:1.at least one child under age 13, orC. If the participant is married, the spouse must either be:
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.1.employed,
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 the year.
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 the reimbursement.
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 is forfeited.
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.