A recent IRS Information Letter answers a question about run-out periods in dependent care assistance programs. This Information Letter does not break new ground, but it does articulate an important point that may be helpful to employers as they get questions from plan participants.
A dependent care assistance plan (DCAP) can, by its terms, establish a run-out period. A run-out period is a designated period of time following the close of the plan year, during which time, participants can submit requests for reimbursement of claims incurred during the plan year. It is the terms of the plan that set the run-out period; the law itself does not require these types of plans to include a run-out period. It is the responsibility of the plan sponsor to follow the terms of its written plan, as well as communicate the timeframes for submitting claims to participants.
The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.
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