2021 Dependent Care FSA limit increase

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The American Rescue Plan Act of 2021 (ARPA), signed into law on March 11, 2021, permits employers to increase the annual limit on contributions to Dependent Care Flexible Spending Accounts

The new Dependent Care FSA annual limit for 2021 pretax contributions increases to $10,500 (up from $5,000) for single taxpayers and married couples filing jointly, and to $5,250 (up from $2,500) for married individuals filing separately.

Below are some items to consider if you are interested in amending your plan for 2021 to include the new Dependent Care FSA limit of $10,500.

The example provided below is based on a plan that begins on April 1, 2021 and ends on March 31, 2022.