Dependent Care FSA (DCFSA)
benefitsAlso known as: DCFSA, dependent care flexible spending account, dependent care assistance plan
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
Federal limit has not increased from $5,000 since 1986 (legislation has been proposed multiple times to inflation-index it). Use-it-or-lose-it: unused funds at year-end are forfeited (some plans allow a 2.5-month grace period or $640 carryover under IRS-permitted plan design). Pairs with the federal Child and Dependent Care Tax Credit, but you cannot double-dip on the same expenses. For families in the 22%+ federal bracket plus FICA, a DCFSA usually beats the credit; lower-bracket families get more from the refundable credit. Must elect during open enrollment — mid-year changes only on qualifying life events.
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