If I take advantage of retirement incentive in which I agree in November to retire effective June 30 of the the following year, can I may I make the same elections for the FSA as if no such irrevocable agreement existed. This assumes of course that the plan document and retirement incentive agreement are silent on the matter. If I elect to contribute the maximum $2550, spend all of it on qualifying expenses prior to June 30, and contributed only half of that amount, will I have just gained $1275 tax free dollars? Since the employer and I both know with certainty that I will retire mid-year, can they disqualify me from participation? Can they require accelerated contributions so $2550 will be paid in by June 30. It seems that there is an opportunity here to recoup some of my previous year's forfeitures resulting from the use of lose it provisions of the code. Is this just the flip side of that feature serving as an offset to use of lose it?
As I have continued to research my own question, it certainly appears that the uniform coverage requirements would make it possible for me to take reimbursements equal to my toal election of contributions. Since no restrictions exist in the retirement incentive agreement with regard to participation in FSA, no waiver of the benefit exists. I have not obtained/read the plan document, but it is highly unlikely that it contains anything about retirement incentives and agreements related to them since this offering was not anticipated when the plan was put into place. It may be something the employer could/should have considered as it offered the incentive, but I doubt that they did. It is also unlikely that most employees taking advantage of the incentive will be aware of this opportunity collect more prior to retirement than has been paid in. Since the employer reports all of my reimbursements for car allowances... as taxable fringe benefits and because I am subject to AMT I cannot recoup taxes paid on ligitamate business expenses repored in this manner, I have not ethical concerns about doing this. Additionally, the employer refused to allow for the incentive bonus to be paid into my 401k making it subject to my full marginal tax rate. If I can get a little of that back in this way, I feel more than justified in doing so.