IRS Information Letter: Mid-year Election Changes to Dependent Care FSAs, Cafeteria Plans (IRC §125)

Amounts already contributed to a dependent care FSA in 2020 are not eligible to be refunded under Notice 2020-29, which provides Covid-19 relief to tax code Section 125 cafeteria plans and high-deductible health plans, the IRS determined. Notice 2020-29 does not modify the rule that an employee cannot receive amounts from a dependent care FSA other than as reimbursements for dependent care expenses, the IRS determined. Notice 2020-29 allows (but does not require) an employer to amend a tax code Section 125 cafeteria plan to give employees increased flexibility to make mid-year election changes ...