FSA rollover to 401(k) plan

[Guest Melissa M.]

Can FSA balances at year end be rolled over to an employer's 401(k) plan as employee contributions?

If so, can you point me in the right direction for research on:

- How this gets tested in the 401(k) plan

- How this comes into play with 2.5 month rule in FSAs and ADP/ACP Nondiscrimation in 401(k)s

- Payroll tax implications since FSA is tax free and 401(k) is FICA taxed with fed/state/local taxes deferred

- How doe employees make this election (what documentation is required)

If this is allowed and there is anyone out that there has it in place, I would love to speak with you or get your opinion on complexity of having this in place, etc.

Thanks!

[LRDG]

Can FSA balances at year end be rolled over to an employer's 401(k) plan as employee contributions?

No. Unused FSA balances must be forfeited.

[Guest L337pwner5]

I concur with LRDG. I write to suggest that not only should LRDG have bolded "must," but should also have put it in caps.

Also, 401(k) contributions are not "wages" subject to FICA.

[QDROphile]

Elective deferrals are included in FICA wages.

[LRDG]

Section 125 elections are not tax deferred, but instead are exempt from federal income tax and FICA contributions. Most all states that do impose tax on earned income have followed the Feds and exempt amounts elected under Sec. 125 from state income tax.

This should be verified because there were 2 states that delayed making a decision to follow the federal regs., (PA and ?IA?), if memory is correct, eventually all states that tax income followed the Federal regs. Anyone?