2011 Benefits Open Enrollment
Dependent Care Spending Account
Instructions and Information for
Completing Your Personal Enrollment
These instructions will assist you in completing your Personal Enrollment for The University of Iowa Benefits Program.
A Dependent Care Spending Account allows you to arrange for a portion of your earnings, not to exceed $5,000.00 per year, to be deposited into a special account that is then used to reimburse you for dependent care expenses incurred during the year for the custodial care of children or other eligible dependents. IRS regulations provide that earnings allocated to a Spending Account are not subject to federal income taxes, state income taxes, or FICA taxes. If you elect to participate in this plan you are reimbursed for these expenses with income that is not subject to these taxes. Your deposit is limited by your tax filing status. If you file your Federal taxes as married filing separately, you may deposit up to a maximum of $208.33 monthly. All other tax filing statuses may deposit up to a maximum of $416.66 monthly. The combined maximum that a couple may contribute to this account is also $416.66 per month.
Services must be incurred during the current year of participation. Funds that are not claimed for eligible dependent care expenses by the following April revert to the University and may not be claimed by the individual. When an individual terminates, all services and expenses must be incurred by the end of the calendar year in which the termination occurs and must be claimed by the following April. Any funds not spent by this date will be forfeited.
Due to the change in benefits plans, last year's contribution amounts will not automatically carry over for 2011. The University contribution will default to $0.00, unless you have credits you have not applied to the purchase of benefits. If you have not applied all of your General Benefits Credit or Shared Savings Credits to the purchase of benefits, any remainder will go into a healthcare spending account by default.
If there is a minimum amount you want deposited in your spending account/s for 2011, you must work your open enrollment to ensure the amount being deposited is what you desire.
If you want to see the cost of your benefit selections before deciding on a spending account pledge amount(s), simply enter "0" in the 2011 spending account pledge area(s) and then choose the "recalculate" function/button. You can use this function multiple times to experiment with different choices and spending account(s) pledge amounts.
EXPENSES THAT CAN BE PAID BY A DEPENDENT CARE SPENDING ACCOUNT
This account may be used to pay for certain expenses connected with the custodial care of children under the age of 13 years who are claimed as an exemption on the employee’s federal income tax return. It may also be used for reimbursing costs for the care of other eligible dependents such as a disabled spouse or dependent parents.
In order to participate, both the eligible employee and spouse must work or be a full-time student. The expenses must be for the following types of dependent care provided during working hours:
- Nursery schools
- Licensed day care centers and before and/or after school programs
- Private baby-sitters
- Institutions that provide custodial care for dependent adults
The account cannot be used to make payments to an eligible employee’s spouse, to an eligible employee’s child who is under the age of 19 years, or to any person whom the eligible employee claims as a dependent on an income tax return. Any expenses associated with kindergarten or overnight camps may not be used.
You may decide each year during the annual enrollment period whether or not you wish to participate in these plans. If you do not sign up during the annual enrollment, you will not be able to participate during the following year, unless you have a qualifying change in status.
During any one year, once you elect to participate and designate the amount to be deposited into your spending accounts, you may not stop deposits nor change the amount deposited into your account unless you have a qualifying event. A change in your account must be made within 30 days of the event; otherwise you must wait until the next annual enrollment period.
- You do not pay FICA, or Federal and State income taxes on flexible spending account contributions.
- The tax deductibility of dependent care expenses goes down as income goes up. By participating in the flexible spending account, you have the advantage of avoiding the taxes regardless of income.
- While dependent care expenses are tax deductible up to certain levels, participating in the spending account may also let you avoid the 7.65% FICA tax.
- If you are contributing the maximum monthly amount to the spending account, the annual savings to you by avoiding the FICA tax will be approximately $382.00.
There may be some disadvantages to using these accounts:
- Deposits to such an account may reduce your Social Security wage base, and consequently, your Social Security tax contributions may be slightly reduced.
- Once you decide to participate in this plan for any given year and designate the amount to be deposited in such an account, you cannot change this decision. The University must continue to deposit the specified amount into your account. Furthermore, any amount which is not expended for eligible expenses incurred during the calendar year by December 31 of that year, and claimed by April 30 of the next year revert to the University.
You may request reimbursements weekly, monthly, semi annually, or annually, whichever is the most convenient for you. Expenses submitted must have incurred after your first payroll deduction under this program. Request for Reimbursement forms submitted to the Benefits Office by Thursday at 5:00 p.m. will generally be paid the following week. The actual day when the payment is made could vary depending on the presence of holidays. Payment is made directly to the checking or savings account where your monthly pay is deposited. Reimbursement forms are available on the Benefits web site. You may file for reimbursement at any time during the year, but no later than the last business day of April of the following year.
In order to comply with IRS regulations, dependent care expenses cannot be reimbursed until after the service has been provided.
TERMINATION OF EMPLOYMENT
When terminating employment, services must be incurred prior to December 31 to be reimbursable. You have until April of the following year to submit any claims for services. All funds remaining after April of the following year are forfeited to the University.
If you have questions or concerns regarding the enrollment process, please contact:
Web Site: www.uiowa.edu/hr/benefits
Phone: 319-335-2676 or
877-830-4001 (toll free)