Question

Lorina is allowed to open an FSA through her employer. Outside of a few prescriptions and doctors' checkups, she doesn't have many medical expenses. If she's unable to spend all the money in her FSA, how much could she roll over into the next year?

a) $0
b) 100%
c) 50%
d) 25%

Answer 1

An FSA typically allows a rollover of up to $550 from one year to the next, and this amount is subject to IRS guidelines and may vary depending on the employer's FSA plan provisions.

Step-by-step explanation:

If Lorina is allowed to open a Flexible Spending Account (FSA) through her employer and is considering how much unused funds she could roll over into the next year, it's important to know that FSA rollovers are subject to specific limits set by the IRS. Typically, an FSA allows a rollover of up to $550 from one year to the next for healthcare FSAs. This is subject to change and may vary based on employer-specific plan provisions. If the funds exceed this limit, or the plan does not allow a rollover, the excess amount is forfeited. It is important for Lorina to check with her employer about the specifics of her FSA. Therefore, the answer to how much she could roll over is not a percentage, but rather a capped amount that is determined by IRS guidelines and her employer's plan specifics.