Why can't I gift my FSA funds if I'm not using them?

If you have an FSA and a spending deadline that expires on 12/31, you know that the clock is ticking on those funds. For some, there's a rollover option where you can apply up to $610 of your unused funds for 2024 ($660 for plan years starting in 2025). Or you might have the option of a grace period, which gives you a few extra months to use your 2024 FSA money, rather than trying to do all your spending now.

Personally, with so many exciting and unexpected ways to spend your FSA, we're not sure why you'd wait. But it's not our money, and you might not have any rollover or grace period options in your plan.

What if you still end up having too much FSA funds? As in, you overestimated how much you were going to need and now you're left with a stash of unused money? What can you do about it?

Isn't it the "season of giving?"

Don't make us feel guilty - the rules are strict, and they're there for a reason. As you probably realized by the headline, the quick answer is "no, you can't gift your FSA funds." While there are plenty of cool things you might want to share with someone else, buying gifts with pre-tax funds allocated for you and your dependents is a big no-no in the eyes of the IRS.

In other words, even though "'tis the season," if you've been eyeballing those acupressure mats and thinking it'll be a great gift for your great aunt, you're outta luck.

And even though we love your thinking, if you're considering donating the funds, you can't do that either. You may have the items earmarked for a worthy cause, but FSA rules frown upon that activity too. So those boxes of Pull-Ups you wanted to donate to the local shelter will have to come out of another account, not your FSA.

But, I have a lot of FSA money left over. What can I do?

Before we go any further, it's important to know that it's up to you to find out what constitutes as eligible and what your FSA plan will allow. Always speak with your FSA administrator if you have any questions or concerns.

To make things easier for you and your needs, we developed a FSA Deadline Buying Guide designed for a wide range of scenarios, that can help you narrow down your decision making. You'd be surprised at just how many everyday health items are eligible and our buying guide gives plenty of ideas for those with lots of leftover FSA funds. .

In the end, take having all these extra FSA funds as a sign that you may need to reassess your budget for the upcoming year. It would be a shame to set aside all that money and find out that you can't use it up, ultimately wasting it because of a year-end rush to the finish line.

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