On March 11, the UCPath Center sent out the following notice to 118 UCLA Campus employees and 208 UCLA Medical Center employees regarding their Flexible Spending Account.
This contains important information about a change to your 2021 contribution to the University of California Dependent Care Flexible Spending Account (DepCare FSA).
Because FSA plans offer tax benefits, they are highly regulated by the Internal Revenue Service (IRS). This regulation includes non-discrimination testing to ensure that the DepCare FSA plan offers comparable benefits to all employees, regardless of their compensation. Unfortunately, after the plan year ended, we learned that UC’s DepCare FSA did not pass one of the non-discrimination tests for the 2021 plan year. Therefore, to comply with IRS regulations, UC employees who are considered highly compensated (those earning $130,000 and over in 2020) must have the benefit they receive from the plan reduced for the plan year 2021.
As a result, {{TaxableContribution amount}} of the {{2021BenefitElection amount}} in contributions you made to the DepCare FSA in 2021 will be reported to the IRS as taxable wages on your 2022 W-2 form. This change does not affect the taxable income reported on your 2021 W-2 form or your 2021 income tax filing.
Please note that 2021 contributions to the Health Flexible Spending Account (if you participated) are not affected by this change.
If you have a balance in your 2021 DepCare plan account, you may be eligible for a refund. Contributions to your 2021 DepCare plan account in excess of {{NewPreTaxBenefitElection amount}}, for which you have not yet been reimbursed for claims, will be refunded to you, less applicable payroll taxes. If you are eligible for a refund, it will be issued by UC no later than April 30, 2022.
If you have no remaining balance or have received claim reimbursements greater than the adjusted taxable amount of your contribution, you will not receive a refund.
If you have a remaining balance of 2021 pre-tax contributions, you may use that balance for claims for expenses incurred in 2021 or 2022. Note that under pandemic relief provisions of federal law, funds contributed in plan year 2021 can be used for reimbursement of claims incurred in calendar years 2021 and 2022. Claims must be submitted by January 31, 2023.
In the coming weeks, WEX will make an adjustment to the 2021 contribution amount in your DepCare FSA account. You can log in to your account to check your balance at uc-fsa.com.
If you have questions, please contact UCPath at (855) 982-7284, Monday - Friday from 8:00 a.m. - 5:00 p.m. PST and select the following options:
- Select “1” at the main menu for current and former UC Employees
- Enter the last 4 digits of your Social Security number and your date of birth to authenticate
- Select “5” at the user menu
You may also log in to UCPath and click on “Ask UCPath” to submit an inquiry. Please select the following options when creating your inquiry:
- Subject: Type “DepCare FSA NDT”
- Topic: Select “Benefits”
- Category: Select “Flexible Spending Accounts (FSA)/Health Savings Account (HSA)”
We regret and sincerely apologize for this change and any financial impact or inconvenience it may cause you.
Thank you,
UCPath
(855) 982-7284
Monday - Friday from 8:00 a.m. - 5:00 p.m.
