Speaking of Private Accounts...
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Who came up with this dumb-ass rule?
Of course, in the narrow sense Secretary Snow is exactly right in that the Treasury Department likely does not have the authority to "administratively interpret" the rules (i.e., he's declining to be an "activist Cabinet member").
Which only means that Congress should grab the baton and change the rule itself.
The "use it or lose it" rule is one of the most incomprehensible and indefensible constraints in all of tax law. It has no basis whatsoever in terms of economic efficiency (what behavior does it encourage or deter?) or fiscal equity (who benefits from these accounts -- the working poor, the middle class or the rich?).
Scrapping the flex-spend forfeiture rule would be a wonderfully apropos baby step to take toward the President's "ownership society."
An effort to make flexible-spending accounts for health-care expenses more flexible has run into a major roadblock.
Treasury Secretary John Snow rejected a request by the Senate Finance Committee's chairman to modify a heavily criticized rule that forces participants to lose any money left in their accounts at the end of the year. That rule requires employees to spend every penny they set aside in a flexible-spending account each year -- or forfeit the balance.
Of course, in the narrow sense Secretary Snow is exactly right in that the Treasury Department likely does not have the authority to "administratively interpret" the rules (i.e., he's declining to be an "activist Cabinet member").
Which only means that Congress should grab the baton and change the rule itself.
The "use it or lose it" rule is one of the most incomprehensible and indefensible constraints in all of tax law. It has no basis whatsoever in terms of economic efficiency (what behavior does it encourage or deter?) or fiscal equity (who benefits from these accounts -- the working poor, the middle class or the rich?).
Scrapping the flex-spend forfeiture rule would be a wonderfully apropos baby step to take toward the President's "ownership society."
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Posted by KipEsquire on
5 January 2005
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