Morgan Lewis Explains the Use-It-or-Lose-It Rule

Morgan Lewis explains the use-it-or-lose-it rule in "$500 Carryover Opportunity for Cafeteria Plan Health FSAs: Worth the Effort?" They indicate in their slides that:

"On October 31, Treasury responded to the renewed pressure and added a second exception to the use-it-or-lose-it rule. Notice 2013-71 allows an optional carryover of up to $500 from year #1, and the $500 can be used for expenses incurred at any time in year #2--and beyond. Can still make a full $2,500 salary deferral contribution for year #2 [, which] can result in up to $3,000 available for expenses incurred at any time in year #2."

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