Time was an employer’s flexible spending arrangement let you set aside a chunk of money to pay for qualified medical expenses not covered by insurance, but there was a use-it-or-lose-it penalty if you didn’t spend the entire allowance by the end of the year. A few plans allowed a grace period of up to 2 1/2 months.

What’s new: the IRS has eased the rules. FSA plans can now allow a limited carryover of up to $500 for all participants. If the plan is amended to allow a carryover, it cannot also have a grace period into 2015. Having the carryover does not affect the employee’s contribution in the carryover year. 

In the future, the carryover is limited to the lesser of the leftover FSA monies or $500 (or any lower amount the company plan allows). The money cannot be cashed out. If the employee leaves the company, any unused funds will be forfeited.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.

http://www.nickersonpa.com/