A Dependent Care Account (DCA) is a great way for employees to save on dependent care expenses. At the beginning of the plan year, employees choose how much they would like to set aside in a tax-free account. Employees can use this account to pay for eligible dependent care expenses.
A DCA is a tax-free benefit account offered by an employer, where the participant/employee sets aside money to pay for eligible dependent care expenses.
Who is eligible for a DCA?
To be eligible for a DCA, a participant/employee must work for an employer that offers a DCA.
What’s the benefit of a DCA?
The participant/employee does not pay taxes on any money put into an DCA.
Is there a limit to DCA contributions?
Yes, the annual DCA contribution limit is $5000 for 2020.
What expenses are eligible to spend DCA funds on?
Eligible healthcare expenses are governed by IRS Publication 503.
What if I do not use all of my DCA funds during the plan year?
Any funds leftover in a DCA after the plan year is over must be forfeited.