The MIT Dependent Care Flexible Spending Account (FSA) allows eligible employees to set aside funds before taxes for planned dependent care services received for dependent children under the age of 13 while you work or search for work.
You must re-enroll in the MIT Dependent Care FSA each year during Open Enrollment if you want to participate the next year.
How have the CARES Act and other recent COVID regulations impacted MIT’s Dependent Care FSA?
On April 3, 2020, MIT Benefits communicated the extension of the 2019 reimbursement window for Health Care and Dependent Care FSA claims from April 30, 2020 to May 31, 2020. Due to new regulations, that reimbursement window has now been extended to 60 days after the end of the President's declaration of a national pandemic or another time period as designated by the IRS. As of now, no end date for the national pandemic has been declared.
Recent regulations allow employees to revoke an election, make a new election, or decrease or increase an existing Dependent Care FSA election on a prospective basis only. Employees cannot reduce their election to less than what has already been contributed and/or has been reimbursed.
You are generally eligible to participate in the MIT Dependent Care FSA if you work at least 50% of the standard full-time work schedule, have been appointed to work at MIT for at least three months, and are paid by MIT.
Time to enroll: Within 31 days of being hired, during annual Open Enrollment, or following a life-changing event.
Who is not eligible
- teaching or research assistant
- honorary lecturer
- post-doctoral trainee
- member of the armed services assigned to MIT
- paid by MITemps
Member of a collective bargaining unit
If you are a member of a collective bargaining unit, all the provisions of the MIT Dependent Care FSA are subject to the terms of your collective bargaining agreement.
Enrollment and changes
- You may enroll in an MIT Dependent Care FSA within 31 days of your date of hire or appointment or within 31 days of the time you receive your official MIT Welcome Letter, whichever is later. You may choose to begin your coverage on the date of hire or appointment or the first of the next month.
- MIT Benefits must receive your enrollment within this 31-day period or you must wait until the next annual Open Enrollment period, unless you experience a qualifying change in your life that requires you to reassess your benefits.
- Unlike other MIT benefits, you must re-enroll in the MIT Dependent Care FSA each year during Open Enrollment, if you want to participate during the next calendar year.
- In exchange for the tax advantages provided by an MIT Dependent Care FSA, you cannot legally enroll in, cancel, or make changes to your contribution amount outside the Open Enrollment period unless you have a qualifying change in family or employment status.
- If you have experienced a qualifying event in your family or employment status, contact MIT Benefits to make corresponding changes to your benefits. Read the second page of the Enrollment Form below to find out which life events qualify you to make changes to your benefits outside the annual Open Enrollment period — and the required timeframe for making those changes.
- Remember that you are allowed to make changes only to those benefits directly affected by the qualifying life event.
How the plan works
- You make contributions to your Dependent Care FSA between January 1 and December 31 and submit bills for services you receive within that same period. You can continue to submit bills for services you received during that calendar year through April 30 of the next year.
- Estimate the dependent care expenses you expect to pay out over the year to determine the amount you should contribute to the account. You may contribute up to $5,000 each year per family.
- Because this is a use-it-or-lose-it plan, be as accurate as you can in estimating your eligible expenses. You automatically lose any unused money left in your account after April 30 each year. You may not use this money for any other purpose, transfer it to any other account, or roll it over to the next year's FSA.
- When you enroll, contributions to your MIT Dependent Care FSA will be deducted from your pay each pay period before taxes. MIT does not contribute funds to this account.
- Contributions to your MIT Dependent Care FSA stop at the end of the calendar year or if you become ineligible for benefits through MIT as a result of retirement, termination, or change of appointment. In all cases, you may continue to submit claims for reimbursement up until April 30 following the calendar year in which you receive services.
- You must re-enroll in the MIT Dependent Care FSA each year during Open Enrollment if you want to participate the next year.
- Participation in this plan will not affect your salary for purposes of annual salary reviews, 401(k) participation, life insurance coverage, or disability benefits.
- If each spouse contributes to a different FSA, the joint total of their Dependent Care FSA contributions for a calendar year must not exceed $5,000 for a couple filing jointly.
- You may want to compare possible tax savings with this account to the possible savings under the Federal Dependent Care Tax Credit. Consult your tax advisor if you have questions about your situation.
You can find more information on how a Dependent Care FSA works on the WageWorks website.
What is covered
- Generally eligible: daycare centers, summer day camps, pre-school care, and after-school care.
- Not eligible: overnight camp and kindergarten.
- Expenses must be employment-related in that the care was provided so that the employee and spouse or partner, if applicable, could be gainfully employed.
- If the spouse is not working but actively looking for work or is a full-time student, dependent care expenses are generally allowable. The maximum eligible reimbursement is limited to the total income of the lower-paid spouse.
- Only expenses for eligible dependents (see below) are covered.
- Dependent care expenses must be paid after your coverage begins for services received during that same calendar year — you cannot receive reimbursement for expenses incurred in a different year
Who qualifies as an eligible dependent
Dependent care FSA accounts can only be used for the care of eligible dependents. The Internal Revenue Service (IRS) generally defines an eligible dependent as an individual who:
- resides with the employee for more than half the year
- can be claimed as a deduction on a federal income tax return
- is under the age of 13
- is a child or dependent adult over the age of 12 who is physically or mentally incapable of self-care
- is a spouse of the taxpayer, if he or she is physically or mentally incapable of self-care
See the WageWorks list of eligible dependents for more information.
- You must have already had the dependent care services occur before the day you submit for reimbursement and have the dollars available in your dependent care account to be reimbursed. Your deductions will continue to come out of your paycheck on a weekly or semimonthly basis throughout the remaining plan year.
- When you pay for eligible services, submit a reimbursement form below to WageWorks or submit your claim online or use the WageWorks EZ Receipts® mobile app. Review the information above to learn which expenses are eligible. For a complete listing of payment options, visit the WageWorks website.
What Else You Should Know
- Before you decide to contribute, you may want to compare the MIT Dependent Care FSA to the federal tax credit, which applies to many of the same expenses.
- You make contributions to an FSA every pay period on a before-tax basis — that is, federal, state, and Social Security taxes are calculated on the amount of your pay that remains after your FSA contribution has been deducted. Participation in the MIT Dependent Care FSA reduces the amount of your salary that is subject to the Social Security tax, which will result in minimal decreases in Social Security benefits for most participants whose salaries are below the Social Security wage base.
MIT is required under Internal Revenue Code regulations to conduct nondiscrimination testing each year. The nondiscrimination testing assures that employer plans do not provide a more valuable benefit for highly compensated employees (according to the IRS). The preliminary testing occurs at the beginning of the year and, based on the results of the testing, the plan administrator may reduce or cancel your salary deduction or otherwise modify the amount if it is necessary to satisfy provisions of the Internal Revenue Code.
Technical explanation of testing
Many factors go into determining how benefits for highly compensated employees must be reduced to reach a level comparable to benefits for non-highly compensated plan participants. The results of the testing depend on the total number of highly compensated employees that enroll and the pre-tax dollar amount they contribute to the dependent care account, in comparison to the total number of non-highly compensated employees that enroll and the pre-tax dollar amount that they contribute to the account. If the test results show that the average benefits provided to non-highly compensated employees do not equal at least 55% of the average benefits provided to highly compensated employees under the Plan, MIT—to comply with the IRS requirements—needs to decrease the amount highly compensated employees are permitted to contribute.
The IRS determines each year the highly compensated employee threshold that is used for the testing. Prior year earnings are used when testing for the current plan year.
Need Help or Have Questions?
Contact MIT Benefits by phone, email or in-person, or see the additional contact options below.
How to return forms: Unless instructed otherwise, while the MIT campus is on remote-work status due to the COVID-19 pandemic, you may return forms that do not contain sensitive information (such as Social Security Numbers) by email to email@example.com. Forms containing sensitive information must be mailed to MIT Benefits, NE49-5000, 77 Massachusetts Ave., Cambridge, MA 02139 or Lincoln Laboratory, Workforce Service Center, Room S2-112, 244 Wood Street, Lexington, MA 02420-9108.