Starting kindergarten

[bcspace]

This should be simple and probably is but I can't seem to find anything that would allow for a change of election in the case where a dependent child starts school. Is this a qualifying change event?

[Chaz]

The IRS regs for DCAP change in elections due to new coverage becoming available are pretty broad. I think that kindergarten is likely to be considered a newly available provider permitting an DCAP election change.

[bcspace]

Thanks. But the problem I see is that the kindergarten is not charging anything. It's a public school and the ee has already made an election for day care. Do you still think the interpretation can be broad enough for this?

[Guest Sieve]

As Chaz suggests, I think the interpretation would be that there has been a change in provider--no longer X, but now public school Y (which just happnes to be a free provider, like a grandparent, perhaps)--but a change in provider nonethless. See if you think it fits in Treas. Reg. Section 1.125-4(f)(6), Ex. 5 (which even contemplates a family member--thus a free provider--as the new provider permitting a "change of provider" election change).

Of course, the question is why this wasn't taken into account when the deferral election was being made, but I think that's immaterial.

[masteff]

Of course, the question is why this wasn't taken into account when the deferral election was being made, but I think that's immaterial.

Because for day care, I can't be reimbursed for more than I've put in so far. If day care cost $30/month for 8 months (total of $240) and I only put $20/month into the plan, I'd be in the negative for the last 4 months of the year waiting for contributions to catch up to my already incurred expenses. If I can change my election to match my expenditure, then I'm rarely less than 1 month out of balance.

[Guest Sieve]

masteff --

Makes sense. I hadn't really considered that scenario. I had assumed that the cost far exceeded $5,000/yr, and therefore accelerated deferrals would have eliminated the issue of ceasing deferrals in mid-year because the annual $5,000 limit would have been used up by then.

Either way, I think enrollment in public school ought to be considered a change of provider.

[bcspace]

As Chaz suggests, I think the interpretation would be that there has been a change in provider--no longer X, but now public school Y (which just happnes to be a free provider, like a grandparent, perhaps)--but a change in provider nonethless. See if you think it fits in Treas. Reg. Section 1.125-4(f)(6), Ex. 5 (which even contemplates a family member--thus a free provider--as the new provider permitting a "change of provider" election change).

Of course, the question is why this wasn't taken into account when the deferral election was being made, but I think that's immaterial.

Thanks. I think I'll choose to see it this way. It was taken into acount at the beginning but it was thought that the school would not accept the child. However, later on, after some testing, the younger than usual child was accepted into school.