Termination issue: Full FSA monthly contribution, partial month of coverage

[Guest thromer]

I recently terminated employment, and my FSA coverage ended as of my last day at work, about halfway through my monthly pay period.

My employer withheld a full month's FSA contribution from my final paycheck, however.

Any thoughts on whether this is common and/or accepted practice?

It strikes me as inconsistent with Treas. Reg. § 1.125-5(d)(3) (see IRS REG-142695-05 -- http://www.irs.gov/irb/2007-39_IRB/ar14.html): "When an employee ceases to be a participant, the cafeteria plan must pay the former participant any amount the former participant previously paid for coverage or benefits to the extent the previously paid amount relates to the period from the date the employee ceases to be a participant through the end of that plan year."

Thanks for the forum, BTW, it is a great resource.

Ted

[GBurns]

I never noticed this before but that could just be because of a lack of complaints. My personal opinion is that it is just an error in interpretation by your employer. Payroll has a form that tells them the amount to deduct each payroll, but Benefits did not tell them to prorate this one. IMHO you are owed the difference. It might not be worthwhile to pursue if you are still eligible to submit claims for reimbursement and will have enough.