Flexible Spending Accounts

Flexible Spending Accounts are comprised of two major components:

• Health Flexible Spending Account (aka Medical Reimbursement Accounts - MRA)
  Under Internal Revenue Code regulations an employer can offer employees the ability to pay out-of-pocket medical expenses with pre-tax dollars. The employer saves the FICA taxes for every dollar selected by an employee for this purpose. The employee saves Federal and State Income taxes as well as FICA taxes for every dollar the employee elects for this program.
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• Dependent Care Accounts
  Because expenditures on dependent care are considered a necessity for you or your spouse to work, the federal government has enacted regulations to reduce taxes on certain types of expenses that you are already paying out of your pocket. As a result, Section 125 of the Internal Revenue Code was established to allow the elimination of taxes on money you spend for dependent care of a minor child or dependent adult that required day care services.
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