Check your FSA balance!
As we approach year-end, some people find themselves with an FSA balance that needs to be used. Are you one of those people? If you have an FSA (Flex Spending Account), usually through your employer, now is the time to check that balance and start planning your spend down. Keep in mind that you have to spend the balance in your FSA within the plan year (by December 31 for many, but this depends on your plan), or you forfeit that money. Your employer may allow you to carry over up to $550 into the new plan year, or may allow you a grace period of up to 2 1/2 extra months. Employers can offer one option, but not both, and they are not required to offer either option.
Remember, the key advantage of having an FSA plan is that it reduces taxable income. You contribute pre-tax money, up to $2,750 for 2020 and 2021 (as of this writing) to your account, and then when you use those funds for qualified medical expenses, you are not taxed on the distribution. Be sure your expense is a qualified medical expense to avoid being taxed on the distribution.
If you are not sure about what you can spend on, here is a quick reminder. Usually, expenses include insurance copayments, deductibles, qualified prescription drugs, insulin, and medical devices. There are other items that may qualify. If you have no upcoming medical needs, one option is to visit the FSA Store and spend on qualified purchases. The FSA Store provides guidance on items that qualify with an eligibility list you can review. Engage Advising has no relationship with the FSA Store, receives no compensation from the FSA Store, and is not responsible for the information provided by the FSA Store. It is provided solely for informational purposes and as a convenience.
So, if you have a balance in an FSA, check your plan document carefully so as to not miss your plan year end. Next, schedule appointments, medical procedures, prescription refills, etc., before your plan year end to use that balance. If you have a balance and no need for making a copay or deductible at this time, consider stocking up on qualified purchases via the aforementioned FSA Store or other qualified purchase.
As an independent Certified Financial Planner™, I can help you focus on your finances from month-to-month and not just at year’s end. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #FSA #tax #CFPPro #savemoney