Dependent Care FSA deductions - can they change for summmer care

[Guest Debbie Button]

I've been reading the IRS comments on the new cafeteria plan regs on mid-year changes. I'm pretty clear on most of the changes but am concerned with how the dependent care FSA deductions may be handled - or expect to be handled - by employees. According to what I have read, if an employee changes coverage (dependent care providers) mid-year then they can change DC FSA deductions. I understand that but wonder about ee's who either do not use dep care providers over the summer, or who begin to use dep care providers over the summer. I have several ee's every year during open enrollment who ask if they can stop deductions over the summer (or start them over the summer) during the school vacation period. My standard answer has always been no. But if an ee now stops or starts using DC providers during the summer months, this seems like it would fall in with the change in coverage. After reading and re-reading it several times I believe that an ee who just increases or decreases utilization of providers over the summer could not change their election. But the ee's who stop or start coverage may have a case to increase or decrease their deductions.

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Debbie Button