Dependent Care FSA - Employee with no eligible dependents signed up

[waid10]

Hi. Employer has a Dependent Care FSA. Employee signed up in 2014, thinking that this was for a dependent's medical expenses. Thus, no child care was used and Employee does not have any dependents at an eligible age for dependent care FSA dollars. Is there any way to refund the 2014 dollars to Employee and tax them? Or is Employee out of the luck and the money is forfeited to Employer just like any unused portions would be?

Thanks.

[Clements]

It's my understanding that when an employee makes an "impossible" election such as this, it can be corrected, so long as there is clear and convincing evidence of the mistake. For a good explanation, refer to Your Questions on the third page of this McGraw Wentworth ViewsLetter: http://www.mcgrawwentworth.com/Viewsletter/2004/2004_Issue1.pdf. It's old, but explains this clearly.

Having said that, I don't know whether a change would be permissible in 2015 for 2014.