Does Your FSA Have a Grace Period or Rollover?
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Time to read 3 min
Your FSA might let you roll over unused funds or give you extra time to spend them. It all depends on whether your employer offers a rollover, a grace period, or neither. Knowing which option you have can help you avoid losing money at the end of your plan year.
In this guide, you will learn how the FSA rollover and grace period work, the updated limits for 2026, how the two options compare, and what you can do to make sure your funds don't go to waste.
Key Points:
FSAs follow a "use-it-or-lose-it" rule, but your employer may offer a rollover or grace period (not both)
The 2026 FSA rollover limit is $680
A grace period gives you up to 2.5 extra months to spend leftover funds
Rollover amounts don't count toward next year's contribution limit
Not all employers offer either option, so check with your HR department
Does Your FSA Roll Over to the Next Year?
Your FSA can roll over unused funds, but only if your employer allows it. The IRS sets a maximum rollover of $680 for 2026, up from $660 in 2025. If your employer doesn't offer a rollover, any leftover money goes back to them when the plan year ends.
The rollover option applies to healthcare FSAs and limited-purpose FSAs (used for dental and vision expenses only). Dependent care FSAs do not allow rollovers. Your employer decides how much of the $680 IRS maximum they will actually let you carry over, so your limit could be lower.
Here is one of the best parts about the rollover. Rolled-over dollars don't count toward your next year's contribution limit. That means you could start 2027 with up to $680 in rollover funds plus the full $3,400 annual election amount.
What Is an FSA Grace Period?
A grace period gives you extra time after your plan year ends to spend your remaining FSA balance on new eligible expenses. Your employer can offer up to 2.5 months of extra time. For plans ending December 31, that typically means a March 15 deadline.
Unlike the rollover, the grace period has no cap on how much you can spend. Here is what you should know about how grace periods work:
You can use leftover funds on new expenses that happen within the grace period
The grace period is available for healthcare FSAs, limited-purpose FSAs, and sometimes dependent care FSAs
Any funds still unspent after the grace period ends are forfeited to your employer
A grace period is different from a run-out period, which only lets you submit claims for expenses from the prior plan year
Set a calendar reminder for two to three weeks before your grace period deadline. This gives you enough time to schedule appointments or shop for FSA-eligible products before your funds expire.
FSA Rollover vs. Grace Period: Which One Is Better?
You don't get to choose between the two. Your employer picks one, the other, or neither. But knowing the tradeoffs can help you plan your spending.
The rollover gives you a full year to use carried-over funds, but caps the amount at $680. If you have $1,000 left over at year end, you would lose $320. The grace period lets you spend everything, but you only get 2.5 months to do it.
Here is an example. Say you elected $2,000 for the year and only spent $970. With a rollover, you could carry $680 into the next plan year and would forfeit the remaining $350. With a grace period, you would have until March 15 to spend the full $1,030 on eligible expenses. Anything left after that deadline is gone.
3 Tips to Avoid Losing Your FSA Funds
1. Know Your Plan's Rules Before Open Enrollment
Ask your HR department or benefits administrator whether your plan offers a rollover, grace period, or neither. This will help you decide how much to contribute for the year. Many people over-contribute and end up losing money they could have kept.
2. Track Your Balance Throughout the Year
Don't wait until December to check your FSA balance. Log into your benefits portal every few months so you can adjust your spending. If you have money left in the fall, schedule any procedures or appointments you have been putting off.
3. Spend Remaining Funds on Eligible Products
If you still have a balance near your deadline, there are thousands of FSA-eligible products you can purchase. Items like sunscreen, first aid kits, allergy medicine, and reading glasses all qualify. You can browse our full FSA and HSA eligibility list to see what is covered.
Make the Most of Your FSA Before the Deadline
Whether your plan offers a $680 rollover or a 2.5-month grace period, the key is knowing your deadline and planning ahead. A little preparation goes a long way toward keeping your hard-earned money. If you are not sure what your plan offers, reach out to your HR department or check the IRS guidelines on FSAs for more details.
Browse thousands of guaranteed FSA-eligible products at buyFSA.com and spend your remaining balance before your deadline. Every item ships fast and is approved for FSA card purchases, so there is no guesswork or reimbursement hassle.
