Comments on: Flexible spending account : which income earner should contribute?

By: indexfundfan

indexfundfan — Tue, 14 Jul 2009 23:30:45 +0000

Legally, you can’t double-dip. The $5k FSA limit is per family.

By: Moria Ureda

Moria Ureda — Tue, 14 Jul 2009 23:16:12 +0000

Can double income families double dip i.e. can we each enroll in our respective compancy programs and submit my daycare/medical reciepts to both companies FSA’s. I would appreciate your opinion on both the legality and the ethics of this question?

By: JN

JN — Mon, 11 May 2009 19:31:21 +0000

Thanks! This helps. And right, i forgot the medicare tax has no cap.

By: indexfundfan

indexfundfan — Mon, 11 May 2009 17:41:50 +0000

JN, yes, for medical/dental insurance, the same argument applies.

Any premium you paid would reduce your income that is subject to social security tax.

There is no advantage with regards to medicare tax though since there is no income cap for med tax.

By: JN

JN — Mon, 11 May 2009 16:34:34 +0000

This is a very good topic — and probably missed by many people. Thanks for your input!

per the same argument, does it make sense to sign up the whole family’s medical/dental insurance with the lower income earner’s plan (provided the two plans are similar in premium and service coverage) in order to save on SS and MedCare tax?

By: Presenting The Carnival Of Personal Finance #125 | My Two Dollars

Presenting The Carnival Of Personal Finance #125 | My Two Dollars — Tue, 11 Mar 2008 20:49:47 +0000

[...] Flexible spending account : which income earner should contribute? (at Index Town). [...]

By: indexfundfan

indexfundfan — Sun, 18 Nov 2007 05:46:05 +0000

For the case of both earners being below the SS income limit, there would be no difference.

By: Jon

Jon — Tue, 13 Nov 2007 16:26:40 +0000

If both earners are below the social security income limit, should the higher income earner deduct for a FSA?

By: indexfundfan

indexfundfan — Tue, 06 Nov 2007 19:15:00 +0000

I believe the IRA limit PER COUPLE is $5k for dependent care FSA and another $5k for health FSA.

Many companies chose to use a lower limit for the health FSA because it is pre-funded, meaning that you can request a reimbursement at the beginning of the year even though you would contribute the entire amount only by the end of the year. Using a lower limit lowers the risks for the company because otherwise it is difficult to get money back from the employee if he or she claims the entire health FSA amount say in Jan and then resigns in Feb.

By: Daria

Daria — Tue, 06 Nov 2007 18:44:23 +0000

Is there a per couple limit on the FSA contribution? Or if we need to put away $7k, could I put away $5k and my husband $2k.

By: indexfundfan

indexfundfan — Wed, 31 Oct 2007 14:11:48 +0000

tfb,

Thanks for the correction. I have modified the post.

Note to other readers: the earlier version of this post has a second example which illustrates the 401(k) deductions from FICA. This is incorrect and has been removed. To the best of my knowledge, the current post is now consistent with existing regulations.

By: The Finance Buff

The Finance Buff — Wed, 31 Oct 2007 13:50:48 +0000

The analysis for the FSA contribution is correct but it’s not correct for the 401(k) contributions. 401(k) contributions are subject to FICA. In the second table, scenario 2, the income subject to FICA under income 2 should be $60,000. The tax savings is still $620, same as the first table.