Other Issues Addressed

The OPM guidance also addresses several tax issues relating to the accounts, noting that the dependent care account annual maximum is set by the tax code. Said OPM, “This $5,000 limitation is the maximum pre-tax benefit for all dependent care programs available to the employee, including under programs other than FSAs.” That means if an employee is receiving a child care subsidy, which some agencies offer to lower-income employees, and the combined benefit to the employee exceeds the $5,000 limit, both the employee and the agency will be responsible for tax on any aggregate amount that exceeds $5,000 ($2,500 if married but filing separately). There is no maximum health care allotment specified by IRS law. While the maximum permitted in the federal program is $3,000, an employee or spouse may have another FSA available through another employer plan. Thus, the aggregate health care FSA allotments may exceed the $3,000 maximum, OPM said.