New Rollover option (FSA/HSA)

[Jacmo]

Rollover_Memo_no_name_pre_1107.docAnybody see anything wrong with the attached memo to employees regarding FSA/HSA rollover? Group has a grace period for FSAs.

[Bob R]

It's rather technical for an employee communication. But, as to substance, I'm not sure about the second to the last bullet. It states that the rollover is available to future fsa participants without regard to the 9/21/06 rule. I believe the 9/21/06 fsa balance is always a limitation on the fsa/hra rollover option.

[Jacmo]

Thanks, Bob. But---that doesn't make sense for future participants. Someone comes into the workforce for the first time, and must refer back to a date when they were a high school or college student, when their FSA balance was a "zero"? That kind of legislation would be self defeating, and increasingly irrelevant with the passage of time.

I believe the 9/21/06 date was just for '06 FSA participants.

[Guest TXCafe]

Thanks, Bob. But---that doesn't make sense for future participants. Someone comes into the workforce for the first time, and must refer back to a date when they were a high school or college student, when their FSA balance was a "zero"? That kind of legislation would be self defeating, and increasingly irrelevant with the passage of time.

I believe the 9/21/06 date was just for '06 FSA participants.

I would be very interested to hear/read what others think about this. This is just one of the issues in the new legislation which seems either contradictory or to make little sense and on which I'm hoping the IRS will issue clarification. For the time being, we're telling our clients the rollover option exists but that we don't know enough about it to do the administration on it or tell them much about it. I too think the Sept 21, 2006 is a strange rule if it's the indefinite date...especially for an option open until 2012. Hopefully, the IRS will address it soon.