Dependent Care Flexible Spending Account
The Liberty Mutual Dependent Care Flexible Spending Account (FSA) lets employees set aside money on a before-tax basis to pay for eligible dependent care (daycare) expenses.
How It works
The Dependent Care FSA allows employees, on a tax advantaged basis, to pay many of the expenses that come with caring for a loved one. Enrolled employees first pay out-of-pocket for eligible dependent care expenses and then submit those expenses for reimbursement. Note that both the before-tax contributions AND reimbursements for eligible expenses are generally tax-free. It’s important to note that any funds left as of March 31 of the following year don’t carry over and are forfeited.
Employees can elect to contribute between $100 – $5,000 each year. However, there are a few situations where the amount an employee can contribute will be less than $5,000.
|If...||...then the amount the employee can contribute will be:|
|The employee’s spouse also participates in a Dependent Care FSA through their employer and the employee and spouse file a joint federal tax return||Limited to $2,500 each year|
|The employee becomes eligible to participate during the year (e.g., are a new hire or had/adopted a baby)||Reduced by the amount an employee contributed with a prior employer in the same calendar year. (It’s the employee’s responsibility to calculate this.)|
|The employee is considered a highly compensated employee as defined by the IRS (earned more than $130,000 at Liberty Mutual in 2020)||Limited to $2,360 in 2021.|
Eligible dependent care expenses are related to the care of a qualifying individual and not for healthcare expenses. A qualifying individual is a dependent who is:
- Under the age of 13 and lives with the employee for more than six months of the year, OR
- Physically or mentally incapable and shares the same principal residence as the employee
Learn more at Optum Bank.
U.S. employees are eligible to participate in this plan if they’re regularly scheduled to work 20 or more hours per week.
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