What happens to the funds left in the Adoption Assistance Account at the end of the plan year?
Under the Cafeteria Plan, there are two options; Forfeiture or Extended Grace Period. Forfeiture: The adoption assistance benefit is subject to "use it or lose it" rules. The salary reduction contributions made in one plan year may not be rolled into a subsequent plan year. Participants must be sure that any contributions made for adoption assistance are used before the end of the plan year in which they are made. 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 Cafeteria plan in place (i.e. monthly participant fees). For Grace Period: The Plan may provide a grace period of up to 2 - 1/2 months immediately following the end of each plan year during which unused benefits or contributions remaining at the end of the plan year may be paid or reimbursed to plan participants for qualified benefit expenses incurred during the grace period. Given the unpredictability of certain adoption expenses, the availability of a grace period may be especially appealing to participants electing adoption assistance benefits through a cafeteria planFind another question