I 112th CONGRESS 1st Session H. R. 682 IN THE HOUSE OF REPRESENTATIVES February 11, 2011 Mr. Sensenbrenner (for himself and Mrs. Capito) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to increase the contribution limits to dependent care flexible spending accounts and to provide for a carryover of unused dependent care benefits.

1.

Increase in contribution limits to dependent care flexible spending accounts

(a)

In general

Section 125 of the Internal Revenue Code of 1986 (relating to cafeteria plans) is amended by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and by inserting after subsection (h) the following new subsection: (i)

Limitation on maximum annual benefits under dependent care flexible spending accounts

(1)

In general

For purposes of this title, a plan or other arrangement shall not fail to be treated as a cafeteria plan or dependent care flexible spending arrangement merely because qualified benefits under such plan include a dependent care flexible spending arrangement under which the maximum annual benefit for the taxable year is not more than $3,750 ($7,500 in the case of a joint return). (2)

Dependent care flexible spending arrangement

For purposes of this subsection, the term dependent care flexible spending arrangement means a flexible spending arrangement (as defined in section 106(c)) that is a qualified benefit and only permits reimbursement for expenses for dependent care assistance. . (b)

Effective date

The amendment made by subsection (a) shall apply to plan years beginning after December 31, 2011.

2.

Carryover of unused dependent care benefits in cafeteria plans and flexible spending arrangements

(a)

In general

Section 125 of the Internal Revenue Code of 1986 (relating to cafeteria plans), as amended by section 1, is amended by redesignating subsections (j) and (k) as subsections (k) and (l), respectively, and by inserting after subsection (i) the following new subsection: (j)

Carryover of unused dependent care benefits

(1)

In general

For purposes of this title, a plan or other arrangement shall not fail to be treated as a cafeteria plan or dependent care flexible spending arrangement (as defined in subsection (i)(2)) solely because qualified benefits under such plan include a dependent care flexible spending arrangement under which unused dependent care benefits may be carried forward to the succeeding plan year of such flexible spending arrangement. (2)

Unused health benefits

For purposes of this subsection, with respect to an employee, the term unused dependent care benefits means the excess of— (A)the maximum amount of reimbursement allowable to the employee during a plan year under a dependent care flexible spending arrangement, taking into account any election by the employee, over (B)the actual amount of reimbursement during such year under such arrangement. . (b)

Effective date

The amendment made by subsection (a) shall apply to plan years ending after the date of the enactment of this Act.