HR Fast Facts: How Are FSA Contributions Deducted?

Employee flexible spending accounts (FSAs) are funded through employee payroll deductions and company contributions.

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Employee flexible spending accounts (FSAs) are funded through employee deductions and company contributions. Actual deductions per employee will vary based on start dates, plan definition, and contributions. Here is a list of things that impact FSA deduction amounts.

  • Employee FSA start date
  • Employee contribution amount
  • Company plan year
  • Company pay frequency
  • Pay periods left in the company plan year

Example

If an employee starts on December 1 and the plan year ends on December 31, their deduction amount will be based on their desired contribution amount and the number of pay periods they have left to contribute until the end of the plan.

Employee Start Date 12/1
Plan Year 1/1 – 12/31
Total Desired Contribution Amount $2,550.00
Pay Frequency Semi-monthly
Pay Periods Left to Contribute 2
Deduction Amount per Pay Period $1,275.00

 

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