Flexible Spending Accounts

Overview

Updated 11/09/2022

With this feature, employees can contribute pretax dollars into an account that can ultimately reduce out-of-pocket costs for medical, dental, and vision expenses.

The standard transaction type for Flexible Spending Account [FSA] deductions have the pre-tax deduction code of 125FSA Reg. This means that the transaction type will deduct from the employee's pay pre-tax for taxes other than most State Unemployment Insurance [SUI] and State SUI Assessment taxes. However, it will only do so for the annual limit (based on the year). At that time, the deduction will stop for the employee. There will be no after-tax contributions.

This new transaction type will need to have its pre-tax deduction code set 125FSA Reg. This code is applied in Admin Tools > Transaction Type > Detail tab.

Create a Flexible Spending Account [FSA] Transaction Type

You will need to create a new transaction type to account for the FSA deductions that need to be taken pre-tax. To create this new transaction type:

1. Open Admin Tools > Transaction Type > Detail.
2. Click Add New.
3. Name this transaction type "Flexible Spending Account" or something that will prompt your users to understand it is for FSA contributions.
4. Set the Type field to Permanent.
   
5. Set the Deduction Category to OtherHealthInsurance.
   
6. The Pre-Tax Deduction code must be 125FSA Reg. This is the most important step!
7. Select all the branches with which this deduction should be shared.
8. Click Save. 

  

With the employee's deduction set as outlined above, the FSA deduction will calculate on a pretax basis up to (Once that value is met, then the FSA deduction will stop):

Year	Annual Limit
2022	$2,850.00
2023	$3,050.00
2024	$3,200.00