What is the Dependent Care Reimbursement Plan?
The Dependent Care Reimbursement plan is a flexible spending account that allows you to put aside pre-tax dollars out your pay for qualified expenses related to the care of your children age 12 and under and/or elderly or incapacitated dependents (such as custodial care of an elder). The plan allows you to receive payments on a tax-favored basis as you incur the expense rather than waiting each year until tax filing. The IRS limits the amount you can have withheld from your pay each year and lists eligible expenses that qualify for reimbursement. The maximum amount is $5,000 for the plan year. In addition, it is extremely important to estimate your plan year expenses carefully, because the IRS imposes two rules: (1) your election is irrevocable for the plan year unless a change of status occurs and (2) use it or lose it any money remaining in your account at the end of the plan year will be forfeited. The plan runs according to the fiscal year, it runs July 1st through June 30th. For m
The Dependent Care Reimbursement Account is a flexible spending account that allows you to put aside pre-tax dollars out of your pay for qualified expenses related to the care of your children age 12 and under and/or elderly or incapacitated dependents (such as custodial care for an elder). The plan allows you to receive payments on a tax-favored basis as you incur the expense rather than waiting each year until tax filing. The IRS limits the amount you can have withheld from your pay each year and lists “eligible expenses” that qualify for reimbursement. In addition, it is extremely important to estimate your plan year expenses carefully, because of two other IRS rules: (1) your election is irrevocable for the plan year unless a change of status occurs and (2) “use it or lose it” – any money remaining in your account at the end of the plan year will be forfeited. For more information, call the Benefits Office for a Summary Plan Description.
