Flexible Spending Account

[Guest bunchcare]

Where can I find, in writing, concrete information regarding an employer's liability for dependent care in a FSA? We are planning to set our maximum dollar amount at $5,000 per year for dependent care. Is this too high?

[david rigby]

Many cafeteria plans that offer dependent care accounts set that limit about $5000.

What do you mean by "employer's liability"?

[papogi]

$5000 is the federal limit, and is what most 125 plans use as their own maximum. It can't be any higher. As pax says, what employer liability? Employees are only eligible for what they have actually put into their DCSA. For this reason, other than minor and rare timing issues, there should be virtually no liability for an employer to offer DCSA's.

[Guest DK Ellerson]

Papogi is correct. $5,000 is the federal limit, but keep in mind that's in aggregate. i.e. Husband participates in his employer's Dependent Care portion of the Flex plan, spouse also participates in her employer's DCAP. Their combined annual elections cannot exceed $5,000.

You might want to review to Publication 503 regarding Dependent and Child Care expenses.