Do FSA Rollover Funds Expire? | Keep Each Dollar

Yes, leftover FSA rollover money can expire when your plan’s carryover or grace-period deadline passes without eligible spending.

An FSA can feel like free money until the calendar flips and the rules bite. Some plans let you roll a slice of unused funds into the next plan year. Some give you extra time to spend what’s left. Some do neither. The twist is that “rollover” doesn’t mean “yours forever.” It’s still tied to your employer’s plan terms.

This guide explains why rollover funds can still expire, how to find your exact deadline, and what to do in the last few weeks so you don’t donate cash back to the plan.

What Makes FSA Money Expire In The First Place

Most health FSAs follow a “use-it-or-lose-it” structure. You elect an annual amount, the plan sets a plan-year window, and eligible expenses must happen inside that window. If money is left when the window closes, the plan can require forfeiture.

There are two common plan features that shift the ending date:

• Carryover (rollover): your plan may let you bring a limited amount into the next plan year.
• Grace period: your plan may give extra time after plan year-end to incur new eligible expenses.

Plans usually pick one of those two features, not both. IRS rules describe a grace period of up to 2½ months after the plan year ends, and a carryover option that lets a capped amount move into the next year, based on your employer’s plan design. IRS Publication 969 lays out these concepts in plain language.

Do FSA Rollover Funds Expire? What Your Plan Allows

If your employer offers carryover, the carried amount sits in next year’s FSA and follows next year’s rules. That means the carried funds can still be lost later if they remain unused when that next plan year ends. Carryover is a second chance, not a forever bucket.

If your employer offers a grace period, unused funds from the prior year stay available for a short extension after the plan year ends, then any remaining amount is forfeited once the grace period ends.

Carryover, Grace Period, And “Run-Out” Are Three Different Clocks

People often mix these up because all three show up near year-end:

• Carryover: moves a limited dollar amount into the next plan year for new spending in that year.
• Grace period: extends the prior plan year’s spending window by a limited number of months.
• Run-out period: extra time to file claims for expenses that already happened in the plan year (or grace period, if your plan has one). A run-out window does not extend when you can incur expenses.

The IRS cafeteria plan FAQs can help you get oriented to how these plans work under tax rules. IRS cafeteria plan FAQs is a solid starting point.

Why “Rollover” Still Expires

Carryover feels like a safety net, so it’s easy to think the dollars are protected. They aren’t protected from the next deadline. If you carry over $500 into a new plan year and then end that new year with $500 still sitting there, the plan can forfeit it the same way it forfeits any unused balance at year-end.

Carryover is optional for employers. Two coworkers at different companies can see totally different outcomes even with the same FSA election.

How To Find Your Exact FSA Rollover Deadline

Your plan’s deadline is written in the plan materials. Here are the fastest places to locate it:

1. Summary Plan Description (SPD) or plan booklet: look for sections named “health FSA,” “carryover,” “grace period,” and “claims filing.”
2. Your FSA portal dashboard: many administrators show a “use by” date and a “submit claims by” date.
3. HR benefits email or open enrollment materials: the annual reminder often lists the carryover cap and the last date to incur expenses.
4. The plan administrator: ask for the plan-year end date, whether the plan uses carryover or a grace period, and the claim filing deadline.

Watch For Non-Calendar Plan Years

Plenty of FSAs run January through December. Some run on a fiscal year like July through June. If your plan year ends June 30, your deadlines will land in late summer or early fall, not in December.

Once you know your plan-year end, map the three dates that matter:

• Last day to incur eligible expenses (plan year end or grace-period end)
• Last day to submit claims (end of run-out period)
• Carryover amount and where it appears (new plan year balance line)

Some official programs publish clear claim deadlines that show how strict these cutoffs can be. The federal FSA program posts annual reminders on its message board. FSAFEDS claims deadline notice is one concrete illustration of a hard “received by” date.

FSA Rollover Funds Expiration Rules By Plan Feature

Use this table as a checklist for what to verify in your plan materials. It’s built to help you avoid the two most common mistakes: spending too late and filing too late.

Plan Detail To Verify	What It Usually Means	What You Should Confirm
Plan year dates	Defines your spending window	Is it Jan–Dec or another cycle?
Carryover offered	A limited amount moves into next year	Carryover cap for your plan year
Grace period offered	Extra time to incur new expenses	Exact end date of the grace period
Carryover vs grace period	Plans often choose one	Which option is active this year?
Run-out period length	Time to submit claims after spending ends	Final “submit by” date for receipts
Eligible expense timing	Expense date must fall in the window	Service date vs purchase date rules
Debit card proof rules	Receipts may be requested after swipes	How long you must keep proof
Termination rules	Job changes can shorten access	Whether COBRA or run-out applies
Rollover posting date	Shows when carryover appears next year	When the carried funds become visible

How Carryover Amounts Work And Why The Cap Matters

Carryover is not automatic in the sense of “the IRS gives it to you.” Your employer must adopt it in the plan terms, and the plan can set a cap up to the IRS limit for that plan year.

If you’re reading older posts, watch the year. The carryover limit is indexed and can change over time. When your plan administrator tells you the cap, ask which plan year it applies to and whether it matches the IRS maximum.

For special relief years, rules can differ. IRS Notice 2021-15 described temporary flexibility tied to pandemic-era legislation, including carryover rules for certain plan years. IRS Notice 2021-15 is the primary document on that topic.

Carryover Does Not Change What Is Eligible

Carryover changes timing, not eligibility. If an item is not an eligible medical expense under your plan, carryover money doesn’t make it eligible. Your administrator’s eligible expense list is still the rulebook for what gets reimbursed.

Common Reasons People Lose Rollover Money

Most forfeitures happen for simple reasons.

They Spend After The Spending Window Ends

Buying eligible items after the deadline won’t help if the service date falls outside the plan window. A receipt dated the next day can mean zero reimbursement.

They File After The Run-Out Date

Even if you incurred the expense in time, a late claim can be denied. Set a reminder for the claim deadline, not just the spending deadline.

They Change Jobs And Miss The Tighter Deadline

When you leave an employer, access to the FSA can end sooner than you expect. Some plans give a short run-out to file claims for expenses that happened while you were on the plan. Some offer a way to extend access through COBRA. Your SPD will spell out your plan’s rules.

Smart Spending Options In The Last 30 Days

When the deadline is near, you want spending that is clearly eligible, easy to document, and useful in your life.

Schedule Care With Known Costs

• Dental cleanings, fillings, or orthodontic visits already planned
• Vision exams, glasses, contact lenses, lens solution
• Prescription refills and common copays

Buy Daily Eligible Health Items

Many plans reimburse common health items and first-aid supplies. Check your administrator’s eligibility list before you spend, then keep itemized receipts.

End-Of-Year Checklist To Protect Your Balance

This routine saves money because it fights the two deadline traps: spending too late and filing too late.

1. Log into your FSA portal and write down your current balance.
2. Find the last day to incur expenses and the last day to submit claims.
3. Pick two or three eligible expenses you can complete before the spending deadline.
4. Pay, save receipts, and upload claims within a week.
5. Recheck your balance after reimbursements post.

Timing Point	What To Do	Proof To Save
60–45 days before spending ends	Review balance and deadlines; book appointments	Screenshot of plan dates
45–30 days before spending ends	Plan purchases tied to needs (contacts, supplies, copays)	Itemized receipts
30–14 days before spending ends	Finish appointments; confirm service dates fall inside the window	Provider invoice
14–1 days before spending ends	Submit claims you already have; track approvals	Claim confirmations
After spending ends, during run-out	Submit remaining claims for in-window services	Receipts plus EOB, if asked
New plan year start	Check whether carryover posted and how it’s labeled	Portal screenshot of new balance

If You Missed The Deadline

If the spending window ended and your plan requires forfeiture, there may be no fix. Administrators must follow the written plan terms.

Use the miss as data for next year: lower your election if you consistently leave money behind, and set recurring reminders for both deadlines as soon as open enrollment ends.