FSA Carryover in 2026: The Exact Rollover Limit, the $660 vs $680 Discrepancy Explained, and How to Plan Around It

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Why You're Seeing Two Different 2026 FSA Carryover Numbers

Both $660 and $680 are real IRS figures. They just apply to different plan years, and the internet conflates them constantly.

Here's the clean distinction:

• $660 is the carryover limit for the 2025 plan year — unused 2025 funds that roll into 2026.
• $680 is the carryover limit for the 2026 plan year — unused 2026 funds that roll into 2027, per IRS Rev. Proc. 2025-32 §.15.

So when a benefits article says "the 2026 carryover limit is $660," they're describing funds that land *in* your 2026 account — which is technically the 2025 plan year's carryover. When the IRS says the 2026 limit is $680, they mean funds that originated *in* your 2026 account and survive into 2027.

The phrase "2026 carryover" is genuinely ambiguous. It can refer to the year the money comes *from* or the year it lands *in*. Benefits administrators often frame it one way; the IRS frames it the other. Neither party is wrong — they're just answering different questions.

The authoritative source for both figures is the IRS Revenue Procedure issued each fall. For the 2026 plan year, that's Rev. Proc. 2025-32. When you see a conflicting number on a third-party site, check whether they're describing the origin year or the destination year before assuming someone got it wrong.

Health Care FSA vs Limited Purpose FSA vs Dependent Care FSA: Which Funds Actually Roll Over?

Not all FSAs play by the same carryover rules. The account type matters enormously.

Standard health care FSA. The IRS permits carryover up to the annual maximum ($680 for 2026), but "permits" is the operative word. Your employer's plan document must affirmatively adopt carryover. If the plan document is silent — or offers a grace period instead — there is no carryover. Check your Summary Plan Description before assuming the feature exists.

Limited Purpose FSA (LP-FSA). An LP-FSA covers dental and vision expenses and is designed to coexist with an HSA. The same IRS carryover dollar cap applies. The $680 limit is not LP-FSA-specific; it's the ceiling for health care FSAs broadly, and LP-FSAs fall under that umbrella. Critically, LP-FSA carryover does not disqualify you from contributing to an HSA.

Dependent care FSA. These do not carry over under IRS rules. Full stop. A dependent care FSA is use-it-or-lose-it by design. Some plans have offered grace periods — a short window after the plan year ends to incur eligible expenses — but that is not a rollover. If you're unsure whether your plan has a grace period, confirm the details with your administrator.

Grace period vs. carryover. An employer can offer one or the other, not both. If your plan has a grace period, it does not also have a carryover. These are mutually exclusive under IRS rules.

For a broader look at what expenses you can spend your FSA balance on before year-end, our complete guide to FSA-eligible items covers qualifying categories in detail.

What Actually Happens to Your Money: A Step-by-Step Carryover Timeline

Understanding the mechanics prevents the most common forfeiture scenarios.

Step 1: Plan year ends. For calendar-year plans, that's December 31. Your FSA stops accepting new charges for that plan year.

Step 2: Run-out period opens. Most plans give you additional time after year-end to submit claims for expenses incurred during the plan year. Run-out periods commonly run around 90 days, but your administrator sets the length, not the IRS. Missing this window means losing reimbursement on expenses you already paid out of pocket.

Step 3: Carryover is calculated. Once the run-out period closes and all claims are processed, your administrator determines how much unused balance remains. Anything up to $680 (for the 2026 plan year) is eligible to carry over. Anything above that cap is forfeited to the employer.

Step 4: Funds post to the new plan year account. Timing varies by administrator. Some post carryover funds immediately at the start of the new year; others wait until after the run-out period closes. Don't assume the money is available on January 1.

Re-enrollment. Whether you must re-enroll in the FSA to receive carryover funds is plan-discretionary, not an IRS mandate. Some plans deposit carryover funds regardless of re-enrollment; others require it. This is one of the most consequential details in your Summary Plan Description. Missing open enrollment while assuming your carryover will just appear can leave you without an active account to receive the funds.

Termination mid-year. If you leave your job, your FSA access generally ends on your last day of employment unless you elect COBRA continuation. Carryover funds accumulated from a prior plan year are typically forfeited at termination. They do not follow you to a new employer or transfer to a personal account. Forfeited funds revert to the employer, who may use them to offset plan administration costs. Worth factoring into any late-year job change decision.

Real Scenario: Making the Most of Carryover When Contribution Limits Rise

Let's make this concrete.

Say an employee contributes the full $3,400 to their health care FSA in 2026 and spends $2,900 on eligible medical expenses during the year — copays, prescriptions, dental work, the usual. That leaves $500 unspent. Since $500 is under the $680 carryover cap, the entire $500 rolls into their 2027 account automatically.

Now it's January 2027. They contribute the full 2027 limit (not yet released at time of writing — check your plan documents during open enrollment). On day one, they have their carryover $500 plus whatever new 2027 contributions have been front-loaded by their employer's plan. Real buying power, right at the start of the year, for expenses like contact lenses, a dental crown, or a medical device — all of which qualify as Section 213(d) expenses per IRS Pub 502.

Now contrast that with an employee who contributed $3,400, spent only $2,600, and hit December 31 with $800 left. They carry over $680 and forfeit $120. Not catastrophic, but avoidable.

Q4 planning checklist to avoid that scenario:

• Check your FSA balance in October, before open enrollment closes.
• Estimate remaining eligible expenses: scheduled appointments, prescription refills, overdue dental or vision care.
• If you're tracking toward a year-end surplus above $680, accelerate eligible spending — contact lenses, a blood pressure monitor, first aid supplies, or other qualifying items.
• Adjust next year's contribution election at open enrollment to reflect what you actually expect to spend, not what you spent this year.
• Confirm whether your plan requires re-enrollment to receive carryover funds.

Honestly, the mistake most people make is treating FSA planning as a January task. By January, most of these decisions are already locked in.

Tax Treatment of Carryover Funds vs New Contributions

Carryover funds do not get taxed when they roll over. They were excluded from income when you originally contributed them, and that status carries forward into the new plan year. No additional tax event occurs at the moment of rollover.

Carryover funds also do not count against the new plan year's contribution limit. If you carry over $680 into 2027, you can still contribute the full 2027 health FSA limit on top of that. The IRS is explicit on this point in Rev. Proc. 2025-32. The carryover and the annual contribution cap are independent of each other.

The HSA compatibility problem. This is where things get complicated, and it catches a lot of people off-guard.

If you carry over funds from a general-purpose health care FSA into a year when you're enrolled in an HSA-eligible high-deductible health plan (HDHP) and want to contribute to an HSA, you have a problem. A general-purpose health care FSA is considered disqualifying coverage under IRS rules — even if the balance is small and the carryover was automatic. Having that FSA active disqualifies you from making HSA contributions for at least the months the FSA covers.

The solution isn't to ignore the carryover. It's to either spend down the FSA balance to zero before switching to the HDHP, or convert your FSA to a Limited Purpose FSA during open enrollment.

LP-FSA carryover does not create this problem. Because an LP-FSA covers only dental and vision expenses, not general medical costs, it is not considered disqualifying coverage for HSA purposes. Carrying over LP-FSA funds into an HDHP year leaves your HSA eligibility intact.

If you're making the HDHP switch in the coming year, sort out which FSA type you're holding before December 31. The tax consequences of getting this wrong are real, and fixing it after the fact is difficult.

Common Mistakes That Cost Employees Their Carryover Funds

These are the patterns that come up over and over.

Mistake 1: Assuming carryover is automatic. The IRS permits it; your employer has to adopt it. Some don't. Read your Summary Plan Description. If it doesn't mention carryover, you probably don't have it.

Mistake 2: Skipping re-enrollment. If your plan requires active re-enrollment to receive carryover funds and you sit out open enrollment — maybe because you assumed your balance would just transfer — you may end up with no active account to receive the funds. The money doesn't always follow you automatically.

Mistake 3: Carrying a general-purpose FSA into an HSA year. Covered above, but worth repeating. Even a small carried-over balance in a standard health care FSA can disqualify you from HSA contributions. An LP-FSA is the workaround.

Mistake 4: Missing the run-out deadline. The run-out period is your chance to submit claims for expenses you already incurred. Miss it, and those expenses aren't reimbursable — the unused balance doesn't carry over, it's forfeited. Check the exact deadline with your administrator; it varies by plan.

Mistake 5: Over-contributing in your final year of employment. If you leave a job with a large FSA balance, you generally lose it. Carryover funds don't transfer to a new employer. A $3,400 annual election in a year when you're planning a job change in Q3 is a recipe for forfeiture. Scale the contribution to what you can realistically spend before your last day.

FAQ: Quick Answers on the 2026 FSA Carryover Limit

Q: How much FSA money rolls over from 2026 into 2027? Up to $680, per IRS Rev. Proc. 2025-32. Any unused balance above that cap is forfeited.

Q: Is the correct 2026 figure $660 or $680? Both are correct — for different plan years. $660 applies to unused 2025 funds rolling into 2026. $680 applies to unused 2026 funds rolling into 2027. If someone is asking about money sitting in their account right now (in 2026), the relevant cap for what will roll forward is $680.

Q: Does my dependent care FSA roll over? No. Dependent care FSAs are use-it-or-lose-it under IRS rules. Some plans offer a grace period to spend funds shortly after year-end, but that's not a rollover. Check your plan documents for grace period details.

Q: Will my carryover balance affect how much I can contribute in 2027? No. Carryover funds are separate from your annual contribution limit. You can carry over up to $680 and still contribute the full 2027 limit. The two figures don't interact.

Q: I'm leaving my job in November 2026. Do I keep my carryover? Almost certainly not. FSA access typically ends at termination, and carryover funds don't transfer to a new employer or convert to a personal account. Plan your spending accordingly before your last day — and check whether your employer offers COBRA continuation for the FSA, which could extend your spending window at your own cost.