IRS Provides Cafeteria Plan Relief for the Pandemic

In response to the COVID-19 pandemic, Congress enacted temporary special rules for health flexible spending arrangements (FSAs) and dependent care assistance programs under Sec. 125 cafeteria plans.

The changes enacted in the CCA allow flexibility for carryovers of unused amounts from the 2020 and 2021 plan years; extend the permissible grace period for plan years ending in 2020 and 2021; provide a special rule regarding post-termination reimbursements from health FSAs; provide a special carryover rule for dependent care assistance programs when a dependent ages out during the pandemic; and allow certain midyear election changes for health FSAs and dependent care assistance programs for plan years ending in 2021. Read More: Journal of Accountancy

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