FSA and HSA
- denise299
- Dec 4, 2014
- 1 min read
May an employer permit a flexible spending account (FSA) carryover amount to be transferred into a limited-purpose flexible spending account (LPFSA) when adopting a health savings account (HSA)?
As stated by the IRS and released March 28, 2014, “An individual who participates in a general purpose health FSA and elects, for the following year, to participate in an HSA-compatible health FSA may elect to have any unused amounts from the general purpose health FSA carried over to the HSA compatible health FSA.”
Please work with your benefits broker and discuss possible consequences of transferring the carryover into a limited purpose FSA. The IRS regulations, as quoted above, do indicate that it is permissible to have a balance in a limited purpose FSA while contributing to an HSA.
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