Families had no way of knowing during the benefit enrollment period last year what 2020 would bring.  Those who chose to automatically save pre-tax money from their paychecks in a Dependent Care Flexible Spending Account (DCFSA) did so assuming that their childcare expenses would mimic previous years’ routines.

This year has been anything but routine.

The challenge is that DCFSAs have a ‘use it or lose it’ feature, which means that any unused money in the DCFSA is forfeited at year end, though a short-grace period is extended into the following year.  Eligible dependent care expenses include daycare, school programs and camps.  With preschools and schools closed for much of the year, many families find themselves in a situation with more savings than expenses this year.

Previously, DCFSA holders could not change their contribution amounts after the original selection period unless there was a marriage, divorce or another qualifying event. The IRS changed the rules earlier this year, allowing employees to make a mid-year election to change and terminate any future contributions for the remainder of 2020.

If you have not changed your contributions amount yet and have a savings excess, it is not too late to contact your HR Department right away and request an immediate change. It will prevent the forfeiture of future savings and redirect the income you have earned.   Talk to your wealth manager at Budros, Ruhlin & Roe about additional ways to best manage savings before year end.


John McHugh, CPA, CFP®, CAP®

Senior Wealth Manager

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