What is Flexible Spending Account(FSA)?

Flexible spending account is a type of savings account which allows employees to set aside a portion of their earnings with specific tax advantages into separate spending accounts.

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Flexible spending account definition (FSA)

Flexible spending account is a type of savings account which allows employees to set aside a portion of their earnings with specific tax advantages into separate spending accounts. This type of account is used for qualified expenses such as medical care or dependent care expenses.

Benefits of FSA

The biggest benefit of flexible spending account is that the portion of the earning set aside is deducted from employee's earnings before payroll taxes giving the employee lower annual tax liabilities.

The funds must be segregated as per IRS regulations.

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