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Hello all, I started a new job, and my team has told me that we failed section 129 non-discrimination test last year and made the appropriate adjustments prior to the end of the plan year. But they have told me that the W-2s still reflected the full election/contribution amount and not adjusted for the amounts that were considered taxable therefore added as imputed income. I just spoke Payroll, and they said this is how it should be done. But I have also read that only the amount considered pre-tax (tax favored) should be reported on the W-2 box 10. Does anyone know what is correct or is either fine as long as the imputed income is reflected correctly for the plan year? Thank you!

Hello all, We outsource our benefits administration and use Workday Payroll. Currently we have to audit total FSA and HSA contributions at year end to ensure no one has gone over their election or IRS limit. I asked Payroll why we wouldn't have at least the IRS limits programmed on the Workday Payroll side, and the response was that Workday can only handle the 401(K) IRS limits. Does anyone have an experience with this? In my past experience with other payroll systems, the outsourced provider would send goal amounts with the FSA deductions that would be stored on the payroll side to ensure no one goes over that limit by year's end. Looking for any insights for those who may use an outside benefit administration vendor and Workday payroll. Thank you!

Wondering if others have dealt with this idea or can anticipate any hurdles -- Say a company had a standard dependent care FSA program, no pre-tax employer contributions to the employee accounts. Company now wants to establish a fund for employer contributions but subject to taxes, for participating DC FSA employees but not directly to their DC FSA accounts (so to avoid any pre-tax issues plus to avoid being considered towards the employees' $5k/$2.5k contributions limit). Fund would be fixed per year at $xx total (decided at the beginning of the year or end of prior year), and then allocated between participants based on the # of participants in the prior plan year (as if it's a pool to be divvied up based on prior year participation). Eligible participants include anyone who participated in the prior plan year and is still employed at the beginning of the applicable year. Anyone seen this before, or something similar? So long as it's post-tax and not directly to their accounts, any hurdles?

While reviewing my tax form before filing, I realized the amount that was used to pay the 2019 service will be taxable (Box 29 of Form 2441). I never had this experience before since I always used up the $5000 DCFSA annual limit. Scenario: *All amounts are not true amount. DCFSA Plan Year 2020 - covers Sep 2019 to Dec 2020 (incl. grace period) Contribution for Calendar Year 2020 - $3000 as shown on Box 10 of W2 (The other $2000 was contributed from Sep to Dec 2019 that paid CY 2019 service.) Total Paid for Calendar Year 2020 Service - $2000 based on the statement by the daycare each yearend (My kid stopped going to daycare last March 2020 because of Covid.) Year 2020 - Form 2441 - Box 29 - The $1000 is showing as taxable. This $1000 contributed in 2020 was actually reimbursed for 2019 Service Paid. Please note that in Year 2019 - Form 2441, I declared $9000 as qualified expenses based on the statement by the daycare for that year. Part of that $9000 is the $1000 that is showing as taxable in my Year 2020 Form 2441. I did not get any credits as it was already over the $5000 DCFSA annual limit. Question: Can I claim the $1000 as 2019 service paid in 2020 even though I declared it as qualified expense (part of the $9000) in Year 2019)? Thank you and appreciate any insights.

I have an employee that elected Dependent Care FSA for 2017, has had amounts withheld and has processed claims with our provider but just realized that as part of his divorce decree he and his ex switch year to year who covers and claims their child so he is not eligible for the DC FSA. How do we go about refunding him for the amounts withheld and him repaying the amounts he was reimbursed for invalid claims?

An employee, who was in our Dependent Care FSA plan that ended 6/30/2016, did not make an election for the plan year beginning 7/1/2016. The deduction was not removed from payroll and continued to be deducted from the employees pay. This administrative error did not come to our attention until calendar year 2016 was over. What is the proper procedure to correct this error including filing corrected returns?

Hi. Employer has a Dependent Care FSA. Employee signed up in 2014, thinking that this was for a dependent's medical expenses. Thus, no child care was used and Employee does not have any dependents at an eligible age for dependent care FSA dollars. Is there any way to refund the 2014 dollars to Employee and tax them? Or is Employee out of the luck and the money is forfeited to Employer just like any unused portions would be? Thanks.

Hello, What constitutes 'primary care' of a child? Most older children (9-12) are not placed in day care facilities; they go to some sort of camp. I've seen claims denied because soccer camp isn't 'primary care.' Does that definition turn on the mission of the organization hosting the camp? Or the parent's intention in placing them there? What does the IRS use to determine eligibility? Pub. 503 says: The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. What is the qualifying test behind the words 'may be'? One benefits administrator requires parents to submit a statement saying the camp is for the child's care and well-being. Thanks, PL

Is there a knowledgeable person out there that may assist me with some practical applications of the changes from the doma law as it applies to both medical reimbursement accounts and dependent care accounts. There are many articles out there, but I am yet to see one that actually delves into the details I am looking for. Pls contact me directly.