FSA Money Does Not Roll Over — You Lose What You Don't Spend

Flexible Spending Account funds do not roll over to the next year. If you don't spend the money in your FSA by the end of the plan year, you lose it. This is called the "use-it-or-lose-it" rule, and it's built into how FSAs work under federal tax law.

The only exception is a small carryover amount that some employers offer. A few plans let you carry over up to $610 (for 2024) into the next year, but this is optional for employers and not may provide. Even when carryover is available, you still lose anything above that amount.

Because of this rule, FSA planning matters. You need to estimate carefully how much you'll spend on may be able to access medical and dependent care expenses during the year, because overestimating means forfeiting money you've already set aside.

Key Takeaways

  • FSA funds expire at the end of each plan year and do not automatically roll into the next year under federal rules.
  • Some employers offer a carryover of up to $610 (2024 limit) into the following year, but this is optional and not all plans include it.
  • Any amount you don't use and don't carry over is forfeited — the money goes back to your employer or the plan.
  • You can change your FSA election during open enrollment or after a may have access to life event, so you can adjust your contribution if you overestimated.
  • A small grace period (up to 2.5 months into the next year) exists at some employers, giving you extra time to spend current-year funds before they're truly gone.

How the Use-It-or-Lose-It Rule Works

The use-it-or-lose-it rule exists because FSAs are tax-advantaged accounts. When you contribute to an FSA, that money comes out of your paycheck before taxes are calculated, which saves you money on federal income tax, Social Security tax, and Medicare tax. In exchange, the IRS requires that you forfeit any balance you don't spend.

This rule applies to the plan year, which is usually January 1 through December 31, though some employers use different fiscal years. On the last day of your plan year, any remaining balance is gone. You cannot transfer it to a spouse's FSA, roll it into a health savings account, or carry it forward on your own.

The forfeited money does not go to you. It typically goes back to your employer or is used to pay plan administration costs. This is why employers and plan administrators encourage you to spend your FSA funds — they have an incentive to see the money used rather than forfeited.

Carryover: When You Can Keep Some Money

Some employers offer a carryover provision that lets you carry over unused FSA funds into the next plan year. The maximum carryover amount is set by the IRS and changes annually — for 2024, it's $610. This means if you have $800 left on December 31, you could carry over $610 and lose $190.

Carryover is optional for employers. Your plan either includes it or it doesn't, and you won't know unless you check your plan documents or ask your HR department. If your employer does offer carryover, the funds you carry over are available to spend during the next plan year, subject to the same use-it-or-lose-it rule that applies to new contributions.

Not all employers offer carryover because it complicates plan administration. If your employer doesn't offer it, you have no way to preserve unused funds — you must spend them by the end of the plan year or lose them.

Grace Periods: Extra Time to Spend Your Money

Some employers offer a grace period in addition to or instead of carryover. A grace period gives you extra time — usually 2.5 months — after the plan year ends to spend funds from the current year. If your plan year ends December 31, a grace period would let you spend 2024 FSA funds through March 15, 2025.

Grace periods are also optional for employers, so check whether your plan includes one. If it does, you can submit claims for expenses incurred during the grace period using current-year funds. After the grace period ends, any remaining balance is forfeited.

Some plans offer both carryover and a grace period, though this is less common. If your plan has both, you typically use the grace period first to spend down your current-year balance, and then any remainder carries over (up to the annual limit) into the next year.

How to Find Out What Your Plan Allows

The only way to know whether your FSA plan includes carryover or a grace period is to check your plan documents or contact your HR or benefits department. These provisions vary by employer and are not standardized across all plans.

Look for your Summary Plan Description (SPD), which is a document your employer is required to provide. It will spell out the use-it-or-lose-it rule and any exceptions your plan offers. You can also ask your benefits administrator directly — they can tell you the exact dates your plan year runs, whether carryover is available, and whether a grace period applies.

If you're choosing an FSA during open enrollment, this is a good time to ask these questions. Knowing the rules before you commit to a contribution amount helps you estimate more accurately and avoid forfeiting money.

Strategies to Avoid Losing FSA Money

The safest approach is to estimate conservatively. Look at your actual medical and dependent care spending from the past year and contribute a similar amount. If you're unsure, start lower — you can always increase your contribution next year, but you can't recover money you've already forfeited.

Track your may be able to access expenses throughout the year. Keep receipts and know what you've already spent so you can adjust your behavior in the final months. Common may be able to access expenses include copays, deductibles, prescription medications, dental work, vision care, and dependent care (daycare, after-school programs).

If you realize in November or December that you have a large balance remaining, you can spend it on legitimate expenses before the year ends. Stock up on over-the-counter medications, schedule dental or vision appointments, or pay for dependent care in advance. Just make sure the expenses are may be able to access and incurred (not just paid) before the deadline.

If your plan offers a grace period, use it strategically. You have extra time to submit claims for expenses you incurred during the grace period, so don't assume your money is gone on January 1.

What Happens If You Change Jobs or Lose Coverage

If you leave your job or lose FSA coverage mid-year, you generally forfeit any remaining balance in your account. The use-it-or-lose-it rule still applies, even if you didn't choose to end your coverage.

There are limited exceptions. If you experience a may have access to life event — such as a divorce, birth of a child, or significant change in dependent care costs — you may be able to change your FSA election outside of open enrollment. You can also continue FSA coverage under COBRA if you leave your job, though you'll pay the full premium yourself.

If you're planning to leave a job, try to spend down your FSA balance before your last day. Once you're no longer employed, you typically lose access to the account.

Frequently Asked Questions

Can I transfer my FSA balance to my spouse's FSA?

No. FSA funds cannot be transferred between spouses or to any other person's account. Each FSA is individual, and any unused balance at the end of the plan year is forfeited. If both you and your spouse have FSAs, you each manage your own account separately.

What if I have a medical emergency after my FSA runs out?

You'll have to pay out of pocket or use another source of funds. FSA money that's been forfeited is gone. This is why it's important to estimate conservatively and not over-contribute. If you know you'll have major medical expenses coming, you can increase your FSA contribution the following year during open enrollment.

Can I roll my FSA into a Health Savings Account?

No. FSAs and HSAs are separate accounts with different rules. You cannot move money from an FSA to an HSA, and you cannot have both accounts at the same time if you're enrolled in a high-deductible health plan. If you switch to an HSA-may be able to access plan, your FSA balance is forfeited.

Does the carryover limit apply if I have multiple FSAs?

The $610 carryover limit (for 2024) applies to dependent care FSAs and health care FSAs separately. If you have both types of accounts, you can carry over up to $610 in each account, assuming your employer offers carryover for both.

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

may be able to access expenses include copays, coinsurance, deductibles, prescription medications, dental work, vision care, hearing aids, and dependent care (daycare, after-school programs, summer camps). Over-the-counter medications are may be able to access if you have a prescription. Cosmetic procedures and general wellness items like vitamins are not may be able to access unless prescribed by a doctor.