Section 125 Plan > Employee Money

What happens to the money that an employee puts into the FSA Plan?

  • The employee's redirected salary is “banked” by the employer in an account maintained for the employee.
  • Qualified expenses incurred by the employee are reimbursed tax`free from dollars “banked” in the account.
  • If the full amount is not used by the employee before the end of the plan year, the leftover amount is forfeited to the employer.
  • Every effort is made to educate the employees on this risk and to be conservative in their estimates of eligible expenses.
  • As a result, it's our experience that forfeitures are minimal, if any.