By PeopleKeep Team on January 25, 2010 at 11:23 PM
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← Misleading Statistics about American Health CareBy PeopleKeep Team on January 25, 2010 at 11:23 PM
FSAs (Flexible Spending Accounts) are governed by Section 125 of the Internal Revenue Code.
Employees contribute to FSAs through a salary reduction agreement. The employer may also contribute to an FSA if specified in the plan documents.
All contributions are excluded from an employee’s gross income and wages subject to FICA (7.65%). Similarly, employers deduct reimbursements as a business expense and exclude them from wages subject to FUTA (0.8%) and the employer portion of FICA (7.65%).
See Publication 969 for more information.
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