Grace period for short plan years

[Guest parrot87]

-a group has an FSA

-group is changing the plan year via short plan year

-group has a 2 month grace period

-how long can the grace period be for the short plan year?

The regs do not have anything about this so my current interpretation is that the grace period can be up to 2.5 months.

Is there any litigation or further commentary on this?

[J Simmons]

I know of nothing that would prevent the grace period tacked on to the end of the short plan year from being 2 1/2 months. However, short plan years are usually hard enough for the operations of the plan to deal with without the grace period. Is it worth complicating it further?

[Guest parrot87]

I know of nothing that would prevent the grace period tacked on to the end of the short plan year from being 2 1/2 months. However, short plan years are usually hard enough for the operations of the plan to deal with without the grace period. Is it worth complicating it further?

OK, that's what I thought, I'll go with it. The group has always had a grace period.

[Guest Sieve]

Are you really talking about a "grace" period or a "run-off" period? The former allows the use of unused $$ in the first 2-1/2 months of the next plan year, and the latter simply gives time for the filing of claims after the end of the plan year. Your use of the word "always" makes me think you may be talking about a run-off period, since grace periods have been available only for a few years. The answer is the same as John already gave, except that to the best of my knowledge, the run-off period is not limited in length as is the grace period (no more than 2-1/2 months).

[Guest parrot87]

When I said grace period I meant grace period, not run off period. Funny how we have to clarify that. I used always because the group has had an FSA for 2 years, so maybe I should of said "always as long as they've had their FSA"...but then again, that's a philosophical discussion about language and the lengths we need to go with descriptive content and qualifying statements that should be done at another time. P.S. I majored in philosophy, linguistics...mind numbing stuff...

[Guest Sieve]

Just confirming to make sure you had the proper guidance . . .