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What happens to the funds left in the Dependent Care FSA at the end of the plan year?

Employers can decide on how excess funds are handled at the end of the plan year. They have a choice between: Forfeit: After any run-out period, the funds in the account will be forfeited by the employee back to the employer. The employer can use these funds to offset any expenses for having the FSA plan in place (i.e, monthly participant fees). Grace Period (2.5 Month Extension): This option allows employees an additional 2 and 1/2 months at the end of the regular plan year to incur expenses and submit them for reimbursement.

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