Unpaid Leaves of Absence

[Guest jdeets]

Some of our employees take unpaid leaves of absence, and during the period of their leave, do not need dependent care. Is it possible to allow these employees to elect out of the dependent care plan during their leave? If this is not permitted, any thoughts on whether the plan could be amended to provide that any employee who goes on paid leave becomes ineligible to make further contributions?

[Guest Margaret]

What we do is when employees go out on an unpaid leave (they still are covered under benefits--and therefore they accrue (build up) a deficit until they come back. Then once they get payroll checks, the amount owed is deducted. It is my understanding that due to IRS regulations, a dependent care/health care reimbursement accounts cannot be changed during the year without a change in family status.

[SLuskin]

Taking an unpaid leave of absense can be a family status change.