Rollover Proposal Introduced

A proposal has been offered in Congress to allow a $500 rollover of unspent money in FSA accounts at the end of a year into an individual retirement account or other retirement savings account, as part of a larger tax reform measure (HR-1778) sponsored by Reps. Rob Portman, R-Ohio, and Benjamin Cardin, D-Md. The legislation also would make permanent many of the tax reforms enacted in 2001 that, among other things, raised the annual dollar limits for savings in retirement accounts such as the Thrift Savings Plan; many of those provisions are set to sunset 10 years after enactment. Under the latest proposal, those increases also would be speeded up so that the maximum dollar contribution to such plans would hit $15,000 in 2004. However, the measure would not affect the percentage of salary limits that effectively set a lower cap for most federal employees; those limits are being phased out under a separate law.