Dependent Care FSA 2021 Expansion under ARPA
The American Relief Plan Act (ARPA) was signed by President Biden on March 11, 2021.
One little known provision of the plan allows individuals who use a Dependent Care Spending Account (DCFSA) to pay for child care expenses on a pre-tax basis to increase their election from $5,000 per year to up to $10,500 for the 2021 calendar year. This means that if you currently participate in the DCFSA account and wish to increase your pre-tax deductions to up to $10,500 for 2021, you can do so by changing your election through your company.
Of course, this will allow you to save more in both state (if applicable) and federal taxes on the additional $5,500 you would set aside pre-tax to pay for daycare expenses.
As a note, this increase option has been set up and is in place for 2021 only and it does not appear it will be extended beyond 12/31/2021.
If you have any questions at all about this topic, please open a support ticket to the employee benefits department or call us a 702-598-0000 ext 1. We are here to help!