Flexible spending accounts (FSA)
Learn how to manage flexible spending accounts (FSAs) for pre-tax savings on qualified expenses.
Overview
This article explains flexible spending accounts (FSAs)—a Section 125 benefit—and shows how to manage them in Check Console.
What is a flexible spending account?
An FSA lets Employees set aside pre-tax dollars for qualified expenses, lowering taxable wages.
FSA type | Eligible expenses |
Medical FSA | Copays, deductibles, prescriptions, dental and vision costs, medical devices, and more |
Dependent care FSA | Daycare, preschool, after-school programs (children < 13) and in-home or adult-day-care services for a dependent who cannot self-care |
Taxation and reporting
Tax | Taxable | Exempt |
Federal income tax | ✓ | |
Social Security (FICA) | ✓ | |
Medicare | ✓ | |
Federal unemployment | ✓ | |
State withholding | Varies by state | Varies by state |
State unemployment | Varies by state | Varies by state |
Report Employer and Employee dependent-care FSA contributions in Box 10 of Form W-2.
Annual limits and rollover (2025)
Plan | Annual limit | Rollover to 2026 |
FSA – Medical | $3,300 | $660 |
FSA – Dependent care | $5,000 per household | n/a |
There is no catch-up contribution for FSAs. Unused funds generally forfeit at year-end, but a plan may allow the rollover shown above. irs.gov
Manage FSAs in Console
Add the benefit at the company level
- Open the company and select Benefits.
- Select Add benefit.
- Complete the fields:
- Type – FSA medical or FSA dependent care
- Description – Appears on pay stubs and reports.
- Period – None = every pay period; Monthly = monthly max.
- Leave contribution amounts/percentages blank unless they apply to all Employees.
- Effective start – First date the plan is available.
- Effective end – Leave blank unless you know the end date.
- Select Save.
Assign the benefit to an Employee
- Open the Employee and select Benefits.
- Select Add benefit → Assign existing company benefit.
- Review or edit:
- Company contribution amount / percentage – Employer funding (if any).
- Employee contribution amount / percentage – Employee deduction per pay period.
- Effective start – First payroll that includes the deduction.
- Effective end – Leave blank to continue indefinitely.
- Select Save.
FAQs
Do FSAs allow catch-up contributions?
No. Unlike Health Savings Accounts, FSAs do not have catch-up provisions for Employees near retirement.
How long can Employees use unused funds?
Funds not spent by December 31 generally forfeit, unless the plan offers either:
- A rollover (up to $660 for 2025 plans), or
- A grace period (up to 2 ½ months). Plan rules vary.
Recordings
Last updated on May 31, 2024