FSAs do not roll over — you lose any money you don't spend by the end of your plan year

A Flexible Spending Account (FSA) operates under a "use-it-or-lose-it" rule. Any balance remaining in your account at the end of your plan year does not carry forward to the next year. The money reverts to your employer, and you forfeit it. This is the default rule for most FSAs, though a small number of employers offer limited exceptions.

The plan year for an FSA typically runs January 1 through December 31, though some employers use different fiscal years. Your employer sets the exact dates in your plan document. If you have money left over on the last day of your plan year, that amount is gone — you cannot access it, roll it to another account, or carry it forward.

This rule exists because FSAs are funded with pre-tax dollars. Federal tax law treats unused FSA funds as forfeited contributions, which prevents the accounts from becoming a way to indefinitely defer taxes.

Key Takeaways

  • FSA balances do not roll over to the next year under the standard use-it-or-lose-it rule, and any unspent money is forfeited.
  • Your plan year runs on your employer's schedule, usually January 1 through December 31, and your employer's plan document specifies the exact dates.
  • Some employers offer a grace period (up to 2.5 months into the next year) or a carryover of up to $610 (the amount varies by year), but only if they have chosen to include these options in their plan.
  • You can change your FSA election or cancel your account during open enrollment or if you experience a may have access to life event, but you cannot recover money already forfeited.

Limited exceptions: grace periods and carryover amounts

A small number of employers have added one of two exceptions to the use-it-or-lose-it rule. These are optional features that an employer can include in their FSA plan, so they are not available everywhere.

A grace period allows you to spend down your FSA balance for up to 2.5 months after your plan year ends. If your plan year ends on December 31, a grace period would extend your spending window through March 15 of the following year. You can submit claims for may be able to access expenses incurred during the grace period, even though the expenses occurred after December 31. Not all employers offer this — you need to check your plan document or ask your benefits administrator whether your employer has included a grace period.

A carryover lets you roll a limited amount of unused FSA money into the next plan year. The maximum carryover amount is set by the IRS and changes annually; for 2024, the limit is $610. If your employer offers carryover and you have $800 left on December 31, you would forfeit $190 and carry forward $610. Again, this is optional — your employer must have chosen to include carryover in the plan for you to use it.

You cannot have both a grace period and a carryover in the same plan. Your employer chooses one or the other, or neither.

How to find out whether your plan has either exception

Check your FSA plan document, which your employer or benefits administrator should have provided when you enrolled. The document will state whether a grace period, carryover, or neither is in effect. If you cannot find it, contact your benefits administrator or human resources department directly and ask: "Does my FSA plan include a grace period or carryover?"

Do not assume your plan has either feature. Many employers do not offer them, and relying on an exception that does not exist in your plan will result in forfeited money.

Why FSAs don't roll over like other retirement accounts

FSAs are not retirement accounts, and they operate under different tax rules than accounts like 401(k)s or IRAs. Because FSA contributions come from your paycheck before taxes are withheld, the IRS treats unused money as a tax benefit that must be forfeited. Allowing indefinite carryover would let workers defer taxes year after year, which the tax code does not permit.

This is why FSAs are designed for near-term medical expenses — dental work, vision care, prescriptions, copays — rather than long-term savings. The account is meant to help you pay for predictable costs in the current year, not to accumulate a balance over time.

Strategies to avoid forfeiting FSA money

Because the use-it-or-lose-it rule is strict, many people try to estimate their medical expenses conservatively. A common approach is to contribute only the amount you are confident you will spend in the coming year, rather than the maximum allowed.

If you have a balance remaining late in the year, you can submit claims for may be able to access expenses you have already paid for out of pocket. Keep receipts and invoices for medical expenses throughout the year — you can file a claim for them even if you paid with personal funds. Common may be able to access expenses include copays, deductibles, prescription costs, dental work, vision care, and over-the-counter items like pain relievers and allergy medicine (if you have a prescription or doctor's note).

You can also spend down your balance by purchasing may be able to access items before the year ends. Over-the-counter medical supplies, first aid kits, and health-related items are FSA-may be able to access and can be bought at pharmacies or online retailers.

If you know your expenses will change — for example, you are planning a major dental procedure or expecting a new child — you can change your FSA election during open enrollment or within 30 to 60 days of a may have access to life event. This lets you adjust your contribution for the next year, though it does not recover money you have already forfeited.

What happens if you leave your job mid-year

If you leave your employer before the end of the plan year, you typically lose access to your FSA balance when ready, even if your employer offers a grace period or carryover. Some employers allow you to submit claims for expenses incurred before your departure date for a limited time after you leave, but the rules vary.

When you leave a job, ask your benefits administrator in writing what claims important date applies to your FSA. If you have a balance remaining, find out whether you can file claims for past expenses and by what date. Do not assume you can access the money after you leave — most plans cut off access on your last day of employment.

If you move to a new job with an FSA, you cannot roll your old FSA balance into the new one. The two accounts are separate, and any balance in your old account is forfeited when you leave.

FSA vs. Health Savings Account (HSA) carryover rules

If you are comparing FSAs to Health Savings Accounts (HSAs), the carryover rules are very different. HSA balances roll over indefinitely — there is no use-it-or-lose-it rule. Money you don't spend in one year stays in your account and grows year after year. This makes HSAs better suited for long-term health savings, while FSAs are designed for when ready medical expenses.

HSAs also have different contribution limits, tax treatment, and investment options. If you have access to both an FSA and an HSA through your employer, comparing the carryover rules is one factor in deciding which account fits your situation.

Frequently Asked Questions

Can I roll my FSA balance into an HSA?

No. FSA and HSA balances cannot be transferred or rolled over into each other. If you leave an FSA, any remaining balance is forfeited. If you later open an HSA, it is a separate account with its own balance and contribution limits. You can participate in both accounts in the same year if your employer offers both, but they do not share funds.

What if I don't spend my FSA by the important date?

The money is forfeited and returned to your employer. You lose access to it permanently. If your plan includes a grace period, you have extra time to submit claims for may be able to access expenses. If your plan includes carryover, you can carry forward up to the IRS limit (currently $610) into the next year. Otherwise, any unspent balance is gone.

Can I get my FSA money back if I leave my job?

No. When you leave your job, your FSA access typically ends when ready, and any remaining balance is forfeited. Some employers allow a short window to file claims for expenses you incurred before you left, but the money itself does not transfer to you or to a new employer's plan. Ask your benefits administrator about the claims important date when you leave.

Does the grace period mean I have until March to spend my FSA?

Only if your employer has included a grace period in the plan. A grace period extends your spending window by up to 2.5 months after the plan year ends, so you can submit claims for may be able to access expenses incurred during that time. Not all employers offer this. Check your plan document or ask your benefits administrator whether your plan includes a grace period.

What counts as an may be able to access FSA expense?

may be able to access expenses include copays, deductibles, prescriptions, dental work, vision care, mental health services, and certain over-the-counter items like pain relievers and allergy medicine (usually with a prescription or doctor's note). Expenses for cosmetic procedures, gym memberships, and general wellness products typically do not may have access to. Your plan document or your FSA administrator's website lists may be able to access expenses for your specific plan.