Getting money out of a dependent care flexible spending account

[El Ingeniero]

Once again I have managed to almost snatch defeat from the jaws of victory, and I have to hustle to stuff it back whence I am snatching it from.

My wife and I set up a flexible spending account for childcare last year, when we knew my wife was pregnant. Then in February, my wife decided that nothing else would do but to have her mother here.

Now we're sitting with nigh on $4,000 in that account, and facing the possibility that money will disappear unspent on 12/31 (IMO that is outright theft, but that's another discussion). Her employer so far isn't helping, though we haven't really pushed yet. Also, the firm that's managing the DCFSA seems really inflexible as well.

Options under consideration:
1) Prepaying next years child care.
2) Figuring out how to claim her mother (not a citizen or permanent resident) living with us as a dependent and cover the cost of her food, etc.
3) Seeing if we can move the money into her 401K.

Ideas would be welcome.

 

[Stuck in KC]

My account is set up to cover medical as well, dr copay, toothbrushes, all kinds of stuff. Get a copy of your guidelines from human relations and see if you can find some loopholes. I only put $2500 in mine for the year and ran out today. Good luck. Mine also has 90 days after the first of the year to turn in receipts.

 

[madage]

My account is set up to cover medical as well, dr copay, toothbrushes, all kinds of stuff. Get a copy of your guidelines from human relations and see if you can find some loopholes. I only put $2500 in mine for the year and ran out today. Good luck. Mine also has 90 days after the first of the year to turn in receipts.

Good idea, but dependent care FSA is separate from health care FSA (and not all employers provide access to both).

Plans are different, of course, but the plan my employer offers includes an exception to change of status for a change in dependent care provider with corresponding change in cost. If you haven't combed your SPD yet, definitely do that and see if there are any similar provisions that may allow you to claim change in status and adjust the amount of the withholding. Be aware of time limits for changes of status, though, as well as limits on refunds for monies already contributed. My plan, for instance, requires changes of status to be filed within 90 days of qualifying event, and does not allow refunds of excess contributions.

Be careful with trying to claim MIL as a dependent. I don't believe someone you claim as a dependent on your tax return qualifies as a provider for reimbursement under IRS 503. That's what my SPD seems to indicate, but I did not go through 503 to verify.

Good luck!

 

[Matt]

Mama moved in to help with the child, she is entitled to a fair wage for her hard work....

 

[El Ingeniero]

Mama moved in to help with the child, she is entitled to a fair wage for her hard work....

On a non-immigrant visa, and doesn't have a SSN. Can't call her a provider. But could pass as a dependent.

 

[El Ingeniero]

We had a nice 3 way chat with the HR person and the benefits manager. Turns out the money reverts to my wife's company at year's end. So HR will make it so my wife gets the money after all (she will need to pay taxes on it though).