Do FSA Funds Roll Over? | What You Can Still Keep

Yes, unused health FSA money can carry into the next plan year if your employer allows it, usually up to a set IRS cap.

Flexible spending accounts can trim your tax bill, but the year-end rule trips people up all the time. One employer lets workers keep part of an unused balance. Another gives a short extra spending window. Another sticks with strict use-it-or-lose-it terms. So the real answer depends on the plan sitting under your benefits package, not just on the letters “FSA.”

For most readers, this question is about a health FSA tied to job-based coverage. In that case, unused money may roll into the next plan year only if your employer built a carryover feature into the plan. If not, your plan may offer a grace period instead. If it offers neither, the leftover balance is forfeited once the plan’s deadlines pass.

Do FSA Funds Roll Over Under IRS Rules?

Yes, but only when your employer chooses that setup for the plan. The IRS allows health FSAs to include a carryover feature, and for plan years beginning in 2026 that carryover can be as high as $680. Your employer can also pick a lower carryover amount, so the IRS ceiling is not always the number that shows up in your own plan booklet.

There is another twist. A health FSA can offer a grace period of up to 2½ months after the plan year ends, or it can offer a carryover. It cannot offer both. That single detail changes how you should spend, claim, and track your balance in late December and early January.

If your plan has carryover, the money that rolls into the next plan year does not shrink the amount you may elect from your paycheck for that new year. That makes carryover more generous than many workers assume. A rolled balance sits on top of the new election, subject to the plan’s own rules.

Also, when people say “FSA,” they may be lumping together health FSAs and dependent care FSAs. Read the exact account type on your benefits page before you count on a rollover. Year-end handling can differ, and a wrong guess can cost you money.

What Decides Whether You Keep Unused Money?

The rule that matters most is the one in your employer’s plan document or summary plan description. That is where the carryover amount, grace period, claim filing deadline, and year-end cutoffs live. If you only check the card balance page, you might miss the date that matters most.

• Carryover amount: The plan may allow the IRS maximum or a lower figure.
• Grace period: Some plans give extra time to incur new eligible expenses after year-end.
• Claim deadline: You may still have time to file receipts for last year’s expenses even if the spending window has closed.
• Job change rules: Leaving the employer can change access to the account fast.
• Eligible expense rules: Your administrator may ask for receipts or extra paperwork on some items.

If you are not sure which setup you have, go straight to the benefits portal or ask HR for the summary plan description. That saves a lot more grief than guessing from a coworker’s plan, last year’s memo, or a half-remembered email.

How The Year-End Rules Work In Real Life

Carryover

Carryover is the cleanest option for many workers. If you end the plan year with money left, the allowed amount moves into the next plan year. Anything above that carryover cap is forfeited. This works well when your medical spending is steady but not perfectly predictable.

Grace Period

A grace period works differently. Instead of moving dollars into the next year, it gives you a little more time to incur new qualified expenses after the plan year ends. Those new expenses can be paid from the balance left in the old year’s account. That can be handy if you know a dental visit, eye exam, or refill is landing early in the new year.

Claim Filing Deadline

Many plans also give you extra time to submit receipts for expenses you already had during the prior plan year. That filing window is not the same thing as a grace period. You are not getting more time to spend the money on new care; you are getting more time to turn in paperwork for care you already received.

Leaving Your Job

If you leave your employer, the clock can speed up. Some plans stop access at separation, and some let you submit claims only for expenses incurred before that date. If a job switch is coming, read that section of the plan early, not on your last week.

Plan Feature	What It Means	Why It Matters
Carryover	Part of an unused health FSA balance moves into the next plan year.	You may keep money you did not spend, up to the plan cap.
Grace Period	You get up to 2½ extra months to incur new eligible expenses.	You can use last year’s balance on early-year care.
Use-It-Or-Lose-It	No carryover and no grace period.	Unspent money is forfeited after deadlines pass.
Claims Deadline	Last day to file receipts for prior-year expenses.	Missing it can cost you money you already spent correctly.
Lower Employer Cap	Your plan may allow less than the IRS maximum carryover.	The federal ceiling is not always your personal ceiling.
New-Year Election	Your new payroll election is separate from a rolled balance.	A carryover does not cut the new health FSA election limit.
Account Type	Health FSA and dependent care FSA can follow different year-end terms.	You need the rules for the exact account you hold.
Job Separation	Coverage and claim rights may change when employment ends.	Late planning can leave money stranded.

How Much Can Roll Into The Next Year?

The cap changes over time, so old numbers in blog posts and old open-enrollment packets can mislead you. For plan years beginning in 2026, IRS Revenue Procedure 2025-32 sets the health FSA salary-reduction limit at $3,400 and the maximum carryover at $680. The broader carryover and grace-period rule also appears in IRS Publication 969, which states that a plan may offer one year-end relief option, not both.

If you are reading benefits material for 2025, the numbers are lower: a $3,300 contribution limit and a $660 maximum carryover. That is one reason workers get confused in January. The plan document may still mention the prior year while your payroll screen is already using the new number.

For a plain-language summary, HealthCare.gov’s FSA page says you generally must use the money within the plan year unless your employer offers a grace period or a carryover. That same page also spells out the main warning: any amount left after the allowed deadline is lost.

Common Mistakes That Cost FSA Money

People usually do not lose FSA money because the rules are hidden. They lose it because they mix up one deadline with another or assume every plan works the same way.

• Confusing carryover with a claim deadline: You may have until March or April to file claims, yet that does not mean you can keep spending on new care.
• Assuming the IRS maximum applies to every plan: Your employer may allow a smaller carryover.
• Waiting until the last week: A delayed appointment, card issue, or missing receipt can sink reimbursement.
• Forgetting family expenses count: Eligible costs for a spouse or dependents may help use the balance before it expires.
• Treating every store health item as eligible: Some items are fine, some need added paperwork, and some are not reimbursable at all.
• Ignoring job changes: A resignation, layoff, or switch in benefits can change access to the account.

A little calendar work fixes most of this. Mark the last date to incur expenses, the last date to submit claims, and the carryover cap in one place you will actually check.

Year-End Balance	If Plan Allows $680 Carryover	What Happens
$150	All $150 carries over	No forfeiture
$500	All $500 carries over	No forfeiture
$680	All $680 carries over	No forfeiture
$900	$680 carries over	$220 is forfeited
$1,400	$680 carries over	$720 is forfeited

How To Use The Remaining Balance Before It Expires

If your plan has no carryover, or your balance sits above the carryover cap, move early. Start with costs you were already likely to pay out of pocket. A late-year vision exam, contact lens supplies, dental treatment, copays, bandages, test kits, or prescription items can often soak up the balance fast if they fit your plan’s rules.

Then check your administrator’s eligible expense list and receipt rules before you buy anything. A five-minute check beats a denied claim. If your plan uses a debit card, keep the receipt anyway. Card swipes are still audited.

How To Pick A Better Election Next Time

1. Start with recurring costs. Add known copays, therapy visits, prescriptions, contact lens supplies, or dental cleanings.
2. Use last year’s claims. That gives you a cleaner starting point than a guess made from memory.
3. Trim one-off spending. If a procedure or purchase is not likely to repeat, do not bake it into the next election.
4. Match the election to your plan style. A carryover plan gives you a little more room than a strict use-it-or-lose-it plan.

If your balance is still hanging around late in the year, pull up your plan summary, check the carryover cap, and match your shopping list to eligible care. That small bit of prep can stop a needless forfeiture.