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Regulation and Compliance > Federal Regulation > IRS

Treasury Lets Reservists Take FSA Distributions

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Citizen soldiers who go on active duty may be able to withdraw cash from flexible spending accounts.

The Internal Revenue Service has described the rules that apply to FSAs held by activated reservists in IRS Notice 2008-82.

The notice implements the Heroes Earnings Assistance and Relief Tax Act of 2008, which changes the usual FSA “use it or lose it rule” and creates a “qualified reservist distribution” option for employers of reservists called to active duty.

The government will permit employers to let activated reservists withdraw unused FSA funds, but it will not require employers to do so, IRS officials say.


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