Flex Spending Account Rollover: What You Need to Know

Flex spending accounts can be a great way to save money on healthcare expenses, but what happens when you don't use up all your funds by the end of the year? You can roll over your unused balance to the next year, but there are some rules to be aware of.

The IRS allows you to carry over a maximum of $550 from your flexible spending account (FSA) to the next year. This is a great benefit, but it's essential to understand the limitations.

You can only roll over unused funds from your healthcare FSA, not your dependent care FSA. This means you'll need to keep track of your contributions to both accounts separately.

If you're not sure how much you can roll over, it's a good idea to review your FSA account statements from previous years to get an accurate picture of your unused balance.

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Contribution limits for FSAs are set by the IRS, and in 2025, the limits are $3,300 per year for health care or limited-use FSAs, $5,000 per year for single or married filing jointly for dependent care accounts, and $2,500 per year for married filing separately.

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To determine how much to contribute, take a look back at your eligible expenses from the past year, and consider any upcoming events that may impact your expenses, such as a major surgery or a new baby. You can also check with your employer to see if they offer a rollover option for leftover FSA or transportation and parking account funds.

Here are the key FSA contribution limits and rules to keep in mind:

Some employers offer a grace period or rollover option for leftover FSA funds, so be sure to check with your employer to see what options are available to you.

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In 2025, the IRS sets a limit on how much you can contribute to your FSA and other reimbursement accounts during the year. The maximum FSA contribution limit is $3,300 per year.

The IRS also sets limits on dependent care accounts, which are $5,000 per year for a single person or married filing jointly, and $2,500 per year for married filing separately. This can be a huge help for families with children or elderly dependents.

If you're looking to contribute to a transportation and parking account, the monthly limit is $325. This can be a nice perk for commuters who use public transportation or drive to work.

Here's a summary of the 2025 contribution limits:

The IRS sets a limit on how much you can contribute to your FSA and other reimbursement accounts during the year. In 2025, those limits are as follows:

It's essential to consider your past expenses and upcoming needs when deciding how much to contribute to your FSA and reimbursement accounts.

Yes, FSAs and reimbursement accounts are pretax. The income you set aside for these accounts isn't subject to taxes.

This means you'd use after-tax money to pay for expenses without these accounts, but with them, you hold money before taxes are taken out, reducing your total taxable income.

FSAs and reimbursement accounts are special and useful because they hold money before taxes are taken out, leading to sizable savings as time goes on.

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FSAs, or Flex Spending Accounts, are savings accounts that allow you to deposit pre-tax money to pay for qualified medical expenses.

You can contribute to FSAs through your employer, but you must choose the annual amount you want to contribute during your open enrollment period.

FSAs aren't tied to a specific type of health insurance plan, unlike HSAs.

You can typically change your elected contribution levels outside of open enrollment if you've experienced a qualifying life event like getting married or having a child.

There are three main types of FSAs: General Purpose or Healthcare FSAs, Dependent Care FSAs, and Limited Purpose FSAs.

Here are the main types of FSAs:

Keep in mind that FSAs have a "use it or lose it" policy, meaning you'll lose any leftover money at the end of the year unless your employer allows rollover.

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Eligible expenses for reimbursement accounts are limited by category. You can use your FSA and reimbursement accounts for specific expenses, such as health care, vision and dental, dependent care, and transportation.

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To determine how much to contribute to your FSA and reimbursement accounts, look back at your expenses from the past year. You can also consider any upcoming events that may impact your expenses, like a major surgery or a new baby.

FSAs and other reimbursement accounts are "use it or lose it", which means you'll lose any leftover money at the end of the year. However, some employers allow you to roll over a certain amount of leftover funds to the following year, so check with your employer to see if this is an option.

Some eligible expenses for reimbursement accounts include:

FSAs are governed by the IRS' use-or-lose rule, which requires that any funds in an FSA must be spent by the end of the plan year or else be forfeited to the plan.

Employers have the option to either allow employees to rollover up to the IRS-defined annual rollover limit or give employees a 2 ½ month grace period following the end of the plan year during which employees can use any remaining funds.

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The maximum allowed carryover from a 2023 plan is $610, and 59% of plans on the WEX benefits platform have a carryover.

Here's a breakdown of the FSA carryover and rollover rules:

It's best to know what your employer's rollover and grace period rules are when you sign up for an account. This can help guide you to what you'll need in the coming year and ensure you don't lose any unused funds.

The IRS permits employers to allow their employees to carry over up to $610 from their 2023 FSA.

Not all employers offer carryover options, but it's worth checking with your employer to see if they do. Some employers may allow a carryover of up to $610, while others may have a different limit.

You can roll over leftover FSA funds to the next year, but only if your employer offers this option. Check with your employer to see if you can roll over funds and, if so, how much.

A carryover is not the same as a grace period. A carryover allows you to roll over unused funds to the next year, while a grace period gives you a set amount of time to use your remaining funds after the plan year ends.

Here's a summary of the carryover rules:

Note that carryover rules can vary depending on your employer and the type of FSA you have. It's always a good idea to check with your employer for specific information about their carryover rules.

You can use your FSA contributions to pay for out-of-pocket medical expenses like deductibles, copays, and prescriptions.

Qualifying medical expenses also include over-the-counter drugs for which you have a prescription, such as insulin refills.

Crutches, blood sugar test kits, and bandages are all eligible expenses too.

However, you can't use your FSA contributions to pay for health insurance premiums, long-term care, or any expense covered under your health insurance plan.

Out-of-pocket dental and vision care are also eligible expenses, making FSAs a great way to save for these costs.

A grace period can be a lifesaver for FSA account holders, allowing them to use leftover funds beyond the plan year.

Some employers offer a grace period of up to 2.5 months after the plan year ends, giving employees time to submit claims for expenses incurred during the previous year. For example, if your plan year ends December 31st, a 2.5-month grace period would give you until March 15th to use your remaining FSA balance.

You can use the extra time to schedule elective procedures or pay for related out-of-pocket expenses, like Natasha did in Example 3. This can be especially helpful if you've only used a portion of your FSA contributions by the end of the year.

Not all plans offer a grace period, so it's essential to check with your employer to see if this benefit is available to you. If it is, you can plan accordingly and make the most of your FSA funds.

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Here are some key facts about FSA grace periods: