FSAs do not roll over — you lose unspent money at the end of the plan year

A Flexible Spending Account (FSA) operates under a "use it or lose it" rule. Any money you don't spend on may have access to medical or dependent care expenses by the end of your plan year is forfeited. The funds do not carry forward to the next year, and you cannot withdraw them as cash or transfer them to another account type.

This rule exists because FSAs are funded with pre-tax dollars. The IRS treats unspent balances as a tax advantage you did not use, so the money reverts to your employer. Understanding this deadline is critical to avoiding waste — once the plan year ends, that money is gone.

Key Takeaways

  • FSA funds expire at the end of your plan year and cannot roll over to the next year under the standard "use it or lose it" rule.
  • Your employer may offer a grace period of up to 2.5 months after the plan year ends, during which you can still spend down your FSA balance.
  • Some employers allow a carryover of up to $610 (as of 2024) into the next plan year, but this is optional and not all plans include it.
  • You should track your FSA spending throughout the year and plan medical or dependent care expenses before the deadline to avoid losing money.
  • If you leave your job, your FSA balance is forfeited unless you have an active claim pending or your employer's plan allows continuation.

The grace period: a limited window to spend remaining funds

Some employers offer a grace period that extends your spending window by up to 2.5 months after the plan year ends. If your employer includes this, you can submit claims for expenses incurred during the grace period using your remaining FSA balance. This is not automatic — your employer chooses whether to offer it, and the length varies.

A grace period is different from a rollover. You are not keeping the money; you are simply getting extra time to spend it on may have access to expenses. Once the grace period ends, any remaining balance is still forfeited. Check your plan documents or ask your benefits administrator whether your employer offers a grace period and when it ends.

Carryover: the optional exception to the use-it-or-lose-it rule

Beginning in 2013, the IRS allowed employers to offer a carryover option, which lets you roll up to a certain amount into the next plan year. As of 2024, that limit is $610, though it adjusts annually for inflation. Not all employers offer this option — it is entirely voluntary on their part.

If your plan includes carryover, you can keep up to $610 of unspent funds and use them in the next plan year. Any amount over $610 is still forfeited. Carryover is separate from a grace period; your plan may offer one, both, or neither. Your benefits administrator or plan documents will tell you which applies to your account.

What triggers forfeiture and when it happens

Forfeiture occurs automatically on the last day of your plan year if you have not spent your FSA balance. Most employers operate on a calendar-year plan (January through December), though some use different plan years. The exact date depends on your employer's plan design.

If your employer offers neither a grace period nor carryover, the deadline is final. If they offer a grace period, forfeiture happens at the end of the grace period. If they offer carryover, you lose only the amount over the $610 limit. Once forfeited, the money cannot be recovered — there is no appeal or exception process.

How to avoid losing FSA money

Track your spending throughout the year. Most FSA administrators provide an online portal or app where you can see your balance and submitted claims. By mid-year, you should know roughly how much you have left and plan accordingly.

Common may have access to expenses you can spend down include copays, deductibles, prescription medications, dental work, vision care, and dependent care (childcare or adult care). Over-the-counter medications now require a prescription to be FSA-may be able to access. If you have predictable medical expenses coming up — a dental cleaning, glasses, or a specialist visit — schedule them before the deadline.

If you have a significant balance remaining and no immediate medical needs, you can purchase FSA-may be able to access items in advance: glasses, hearing aids, medical equipment, or a year's supply of prescription medications. Keep receipts for all purchases, as your FSA administrator may request proof that expenses were incurred during the plan year.

What happens to your FSA if you leave your job

When you terminate employment, your FSA coverage typically ends on your last day of work. Any remaining balance is forfeited, even if you have a grace period or carryover option. The only exception is if you have a pending claim for an expense incurred before your employment ended — in that case, you may be able to submit it after you leave.

If you are leaving your job, submit any outstanding claims before your final day. Ask your benefits administrator what the deadline is for submitting claims after termination. You cannot transfer your FSA balance to a new employer's plan; each FSA is separate and plan-year-specific.

FSA carryover versus Health Savings Account rollover

FSAs and Health Savings Accounts (HSAs) are different accounts with different rules. HSAs do roll over year to year — money you don't spend stays in your account indefinitely and can accumulate. FSAs do not work this way. If you are considering switching to an HSA, understand that your FSA balance will be forfeited when you leave the FSA plan, and you cannot transfer it to an HSA.

Some people use FSAs for predictable near-term expenses and HSAs for long-term savings, since HSAs offer more flexibility. However, you cannot have both an FSA and an HSA in the same year if the FSA is a general-purpose medical FSA. Dependent care FSAs can coexist with an HSA.

Frequently Asked Questions

Can I get my FSA money back if I don't spend it?

No. Once the plan year ends, unspent FSA money is forfeited and cannot be recovered. Your employer may offer a grace period or carryover option, but these are limited. If neither applies to your plan, any remaining balance is lost.

What if my employer offers both a grace period and carryover?

You can use both. The grace period gives you extra time to spend your current-year balance. Carryover lets you keep up to $610 into the next year. You would spend down as much as possible during the grace period, then carry over the remainder (up to $610) to next year.

Can I roll my FSA into my spouse's FSA?

No. FSA balances cannot be transferred between accounts or to another person, even a spouse. Each FSA is individual and plan-year-specific. If you are married and both have FSAs, each account operates independently.

Do I lose my FSA if I take unpaid leave or go on disability?

It depends on your employer's plan and the type of leave. If you remain employed and your FSA coverage continues, your account stays active. If your coverage ends, any remaining balance is forfeited. Check with your benefits administrator about how your specific situation affects your FSA.

Can I submit claims for expenses after the plan year ends?

Only if your employer offers a grace period and the expense was incurred during the grace period. Expenses incurred before the plan year ended must be submitted by the deadline (or grace period end date). Expenses incurred after the plan year ends cannot be claimed against a prior-year FSA balance.