7 Facts You Should Know about FSAs 3: You do not have to be enrolled


H


ow much have you spent on medical and day care expenses


so far this year? Are you paying for it with tax-free money? Consider


these facts about


Flexible Spending Accounts (FSA): 1: A health care FSA will reim- burse health care expenses for you


and your eligible tax dependents. 2: A dependent care (day care) FSA


allows you to reimburse yourself for day care expenses incurred because you and your spouse work or are look- ing for work. Use this FSA to pay for day care for children and a qualifying elderly adult. A dependent care FSA is not for eligible dependents’ health care expenses. See the FSA summary plan description on the Benefits por- tal for more information.


The money you borrow can’t grow for retirement. When you take money from your 401(k), even for a limited time, it simply isn’t there in the account collecting interest or dividends or benefiting from a rising stock market. Compounded growth potential or the ability to build po- tential earnings on top of previous earnings are key advantages of your 401(k) retirement plan. The longer the repayment term, the more dev- astating the impact this will have. By leaving your account untouched, you improve your opportunities for this type of growth.


You might not be financially able to make future 401(k) contributions and loan payments. This will also reduce the amount of money you will have in your account for retirement.


If your employment ends, the 12 EXCHANGE POST | JULY 2016 in any medical or dental plans to


participate in a health care FSA. 4: You must make an election


during open enrollment in the fall of each year if you want to participate in an FSA for the next year. You also can enroll within 31 days of a quali- fied change in family status, such as


marriage, birth or adoption. 5: You get a debit card with the


health care FSA. In January, the card is loaded with your full year’s election amount for you to use immediately,


Read This Before You Borrow from Your 401(k)


Remember, your AAFES 401(k) retirement savings account helps you build financial security for your retirement years.


loan may default. If you end your employment and don’t pay back what you owe within 90 days, the outstanding amount may default and is considered a distribution. You’ll owe ordinary income taxes on the amount you haven’t paid back and possibly a 10 percent early withdrawal penalty if you’re young- er than 59½.


You’ll pay back your loan with af- ter-tax dollars. When you take a loan from your 401(k), you borrow money that you had put away on a pre-tax basis. You will pay it back


with after-tax dollars, so taxes be- come a factor. You pay taxes on the portion of your paycheck that goes to repay the loan.


Restrictions and expenses may apply. You are limited to one loan at a time, and the loan amount can not exceed 50 percent of your account balance. Additionally, you will be assessed fees to initiate and main- tain the loan.


Flexible spending accounts save you money!


even though no deductions have been


made from your paycheck yet. 6: You can roll over up to $500 of


unused health care FSA into the next year. You cannot roll over any depen-


dent care FSA money into the next year. 7: You may deduct health care ex- penses from your federal income tax if:


• They weren’t reimbursed using your health care FSA.


• They exceed the annual thresh- old set by the IRS.


• They were not paid by a health insurance plan.


To learn more about the FSA program, check out the Benefits portal.


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