Flex Spending Plan - Dependent Daycare Accounts

[Guest Sandra]

Can anyone help me with the timeframe (specific date) in which deductions taken from an employees check must be credited to the Employees Dependent Care Account for reimbursement to the employee? Is there a law under Erisa or other IRS regulation?

Example: Employee has a $200.00 paycheck deduction for Dependent Daycare. Employer must credit the Flex Account with the $200.00 to allow for reimbursement of the funds back to the employee.

The problem I'm having is an employer isn't consistently forwarding the deductions to the accounts for reimbursement. In any given week the employer may take 1-2 weeks before sending the check to the carrier for posting to the employee flex account.

What is the timeframe for these payments to be posted in the employee account.

Thank you very much!

Sandra

[papogi]

I've not seen it specified, but the term "reasonable" is used. I seem to remember "monthly" being used in the regs, so your timeframe would likely pass the test if the issue were pushed to a court.

[Guest TXCafe]

I don't know exactly where it is in the regs but I believe it's reimburse at least every month. As far as separating the funds themselves from general assets there's no trust requirement so this doesn't really have to be done (that would be a 125 reg not a DCAP anyway). I believe if you do use a trust, you have to separate it to be available to be reimbursed in a "reasonable" amount of time. Hope that helps some!

[Guest Sandra]

I've not seen it specified, but the term "reasonable" is used. I seem to remember "monthly" being used in the regs, so your timeframe would likely pass the test if the issue were pushed to a court.

Thank you for your input.

[Guest Sandra]

I've not seen it specified, but the term "reasonable" is used. I seem to remember "monthly" being used in the regs, so your timeframe would likely pass the test if the issue were pushed to a court.

I appreciate your response.