What happens if there is money left in my account(s) at the end of the plan year?
Under IRC 125, the money in your account will be forfeited and reverts to the general assets of Colorado College. This is known as the “use it or lose it” rule. For this reason, it is wise to make conservative estimates of your reimbursable expenses prior to each plan year. You may want to track what you spent in one plan year and use that as an estimate for the next plan year. If you visit either IRS Publication 502 or 503 you will see many creative ways to use the money left in your fund. Even if you forfeit some of your funds, the tax advantages will, in most cases, outweigh the loss.
