Are there any restrictions on the use of EFT for FSA reimbursements?

[Guest CWells]

Does the IRS impose any restrictions on the type of account into which an electronic funds transfer for FSA reimbursement may be deposited? For example, can EFT be used to deposit the reimbursement directly into a money market account?

[KIP KRAUS]

Let’s see. You pay for medical expenses on a pre-tax basis from money deducted from your pay and instead of taking the reimbursement in cash you want it direct deposited to a money market account. I guess my question would be why would the IRS care what you do with the money as long as it’s being reimbursed from a FSA for qualified expenses?

Unless the plan administrator doesn’t want to do it, why not allow it?

I have no regulation to quote you. This is just how I would view the situation.

O.K. now you legal beagles out there can jump in.