Note that your employer is not required to adopt this extension into
their plan. Mine isn't, so our plans are still use-it-or-lose-it by the
end of the year. I don't know if my company's position will be common
amongst other companies or not (I hope not).

-Will

Rich Carreiro wrote:
- quote -

We just got a note on this from our HR department.

Apparently the IRS has issued a new regulation (IRS Notice 2005-42) on
these plans, such that the plans are now allowed to offer a 2.5 month
grace period before the required forfeiture of unused funds happens.

So instead of any unused funds in year N not being able to be used
for year N+1 expenses, and then being forfeited once the deadline
to submit year N expenses passes, what can now happen is that the
year N money stays "live" until 15 March N+1 and you can submit
Year *N+1* expenses against the carried-over Year N money. Once
the Year N money is all used up, Year N+1 expenses start coming out
of Year N+1 money.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us