The IRS releases guidance for an increase in the FSA carryover amount.

The IRS explains that the guidance addresses unanticipated changes in expenses because of the COVID-19 pandemic.

In Notice 2020-33, the IRS announces a new limit on unused amounts remaining as of the end of a plan year in a health FSA that may be carried over to pay or reimburse an employee for medical expenses incurred during the following plan year. The maximum unused amount from a plan year starting in 2020 allowed to be carried over to the immediately following plan year beginning in 2021 is $550. The current limit is $500.

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