This afternoon, the IRS and U.S. Department of Treasury have issued a n-13-71 modifying the healthcare flexible spending account (FSA)’s “Use-it or Lose-it” rule.

Effective immediately, employers that offer FSA programs that do not include a grace period will have the option of allowing employees to rollover up to $500 of unused funds at the end of the plan year.

The rollover has no impact on the annual maximum salary reduction amount that applies to FSAs and is permitted by law. Therefore employees can rollover up to $500 and still salary reduce up to $2,500 into their FSA for the plan year.