Do you lose your FSA when you leave a job? This is a common question among employees who are considering a career change or have recently been laid off. Flexible Spending Accounts (FSAs) are a valuable benefit that allows employees to set aside pre-tax dollars for healthcare expenses. However, the fate of your FSA upon job departure can be a source of confusion. In this article, we will explore the rules surrounding FSAs and what happens to your funds when you leave a job.
When you leave your job, there are a few scenarios to consider regarding your FSA. First, it’s important to understand that the funds in your FSA are not yours until you have used them. If you have unused funds in your FSA at the time you leave, you have a few options:
1. Use It or Lose It: If your employer offers a grace period, you may have an additional 2.5 months from the end of your plan year to use the remaining funds. However, if you don’t use the funds within this grace period, you will lose them.
2. Roll Over: Some employers may offer a limited rollover option, allowing you to roll over up to $550 of your unused funds into a new FSA for the following year. This is only available if you have a new employer who also offers an FSA.
3. Hardship Withdrawal: If you experience a qualifying hardship, such as medical expenses, you may be eligible to withdraw the remaining funds from your FSA. However, this is subject to IRS regulations and may not be available in all cases.
It’s crucial to review your employer’s FSA policy carefully, as the rules may vary. Additionally, if you leave your job due to termination or layoff, you may have a different set of rules regarding your FSA. In some cases, you may be able to keep your FSA and continue using the funds until the end of the plan year or the grace period, whichever is later.
Another important factor to consider is the status of your healthcare expenses. If you have incurred eligible expenses that you haven’t yet submitted for reimbursement, you should submit those claims as soon as possible. This will ensure that you receive any reimbursements before you lose your FSA benefits.
In conclusion, whether or not you lose your FSA when you leave a job depends on your employer’s policies, the type of FSA you have, and your individual circumstances. It’s essential to understand the rules and act accordingly to avoid losing out on valuable funds. By reviewing your FSA policy, submitting any pending claims, and exploring your options for using or rolling over your funds, you can ensure that you make the most of your FSA benefits, even when you leave your job.
