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Election change deadline after a Status Change


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Our RTO document doesn't specifically address this and I can't find it in the Regs. After someone has a new child, so a Status Change event, is there any sort of deadline that they have to make an election to start contributing to a Dependent Care FSA? It seems like during the 12 week or so maternity leave, the decision for child care could change a couple of times before something is decided. So, I can see where an employer might give the employee a pretty long period of time before they shut off the ability to make a DCA election after this Status Change event.

Can someone point me to something in the Regs that states a definitive time period? Thanks 

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Yeah there is no prescribed timeframe in the Section 125 cafeteria plan rules for employees to make the election change request upon experiencing one of the permitted election change events.  As a practical matter, virtually all cafeteria plans set this outer deadline at 30 days from the date of the event.  The cafeteria plan document or summary materials should confirm.  You need to stick to that outer limit to avoid potentially losing the safe harbor from constructive receipt.  More details here: 2022 Newfront Section 125 Cafeteria Plans Guide

A couple other items of note:

  • Employees who are on parental leave (or their spouse is on parental leave) generally cannot incur reimbursable expenses under the dependent care FSA.  Employees’ dependent care expenses are eligible for reimbursement under the dependent care FSA only if the expenses are “employment-related,” which means they enable the employee and spouse to be gainfully employed.  More details here: https://www.newfront.com/blog/dependent-care-fsa-during-maternity-leave-2
  • The cafeteria plan rules with respect to the dependent care FSA rules are the most loose on what events will permit an election change.  I read those rules as permitting employees the ability to change their dependent care FSA election upon virtually any change in their daycare situation.  More details here (see slide 16): 2022 Newfront Section 125 Permitted Election Change Event Chart
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Agree with Brian, well done!

You may also see a more restrictive Dependent Care FSA change rule in the cafeteria plan document or SPD similar to Vanguard's below, best to follow plan document the plan has.

https://crewconnect.vanguard.com/totalrewards/benefits/statuschange/flexcare_chg_dependent_daycare_fsa_chg.html 

Change Dependent Day Care FSA

If you are changing your dependent day care flexible spending account (FSA) election amount during the plan year is not permitted unless there is a change in your dependent day care provider or a qualified life event change occurs (e.g., marriage, divorce, death of a spouse/domestic partner [DP] or dependent, birth or adoption of a child).

 

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