FSA Grace Period & Run-Out Deadline
2.5-month grace period, carryover, and claims run-out deadlines for a flexible spending account.
These calculators are for informational purposes only and do not constitute legal, financial, or professional advice.
How the FSA Grace Period & Run-Out Deadline works
The FSA Grace Period & Run-Out Deadline calculator projects the deadlines that determine whether unused flexible spending account funds are forfeited at plan year end — the "use it or lose it" rule — and by when a claim for expenses incurred during the plan year must actually be submitted for reimbursement.
Employers can adopt one of two different relief mechanisms, but not both: a 2.5-month grace period that lets employees keep incurring new eligible expenses against the prior year's balance, or a dollar-limited carryover (capped at a figure the IRS adjusts periodically) that rolls a portion of unused funds into the next plan year with no grace period attached. Many plans offer neither, relying only on the standard run-out period for filing claims on expenses already incurred.
The run-out period is a distinct, separate deadline from either relief option: it is simply the window — commonly 90 days, though plans set their own — during which a claim can still be submitted for an expense that was incurred before the plan year ended, regardless of whether a grace period or carryover also applies.
Worked example
A calendar-year FSA ending December 31 offers a 2.5-month grace period. Under that grace period, the employee can incur new eligible expenses through March 15 and apply them against the prior year's remaining balance. Separately, the plan's 90-day run-out period gives until March 31 to actually submit paperwork for any expense incurred by December 31 (or by March 15, under the grace period) — two different deadlines serving two different purposes.
Frequently asked questions
Can a plan offer both a grace period and a carryover?
No — IRS guidance requires a plan to choose one relief mechanism or the other for a given plan year, not both. Check your specific plan documents or benefits administrator to see which one (if either) your employer has adopted.
What is the difference between the grace period and the run-out period?
The grace period extends the window during which new expenses can be incurred against last year's balance. The run-out period is simply the deadline to file paperwork for expenses already incurred, whether or not a grace period applies — it is a claims-submission deadline, not a spending extension.
Is this tax advice?
No — this is general information about how FSA relief provisions typically work, not tax advice, and the carryover dollar limit changes periodically by IRS guidance. Confirm your plan's specific provisions, current carryover limit, and run-out period with your benefits administrator or plan document.