FSA carryover lets you roll up to $660 of unused health care FSA funds into the next plan year instead of losing them. It’s a modification of the old “use-it-or-lose-it” rule, and for 2025, the IRS set the maximum carryover at $660 (up from $640 in 2024). Your employer decides whether to offer carryover, and not all plans include it.
How Carryover Actually Works
If your employer’s plan allows carryover, any unused balance in your health care FSA at the end of the plan year automatically rolls into the next year, up to the IRS maximum. For the 2025 plan year, that cap is $660. Anything above that amount is forfeited. So if you have $800 left at year’s end, $660 carries over and $140 disappears.
The carried-over money doesn’t count against your new contribution limit. In 2025, you can contribute up to $3,300 to a health care FSA. If you also rolled $660 forward, you’d have access to $3,960 total for the year. The carryover balance simply sits on top of whatever you elect for the new plan year.
One important detail: you typically need to re-enroll in your FSA for the next plan year to access carryover funds. If you don’t re-enroll during open enrollment, those leftover dollars may be forfeited depending on your plan’s rules.
Carryover vs. Grace Period
Employers can offer a carryover, a grace period, or neither. They cannot offer both for the same type of FSA. These two options solve the same problem in different ways.
A grace period gives you an extra two and a half months after the plan year ends to spend down your remaining balance on new expenses. For a calendar-year plan, that means you’d have until March 15 to use last year’s funds. The catch is that any money still left after March 15 is gone entirely.
Carryover, by contrast, doesn’t give you extra time to spend. Instead, it preserves a portion of your balance (up to $660) and makes it available in the new plan year with no deadline pressure. The tradeoff is that anything above the carryover cap is forfeited at year’s end.
Neither option should be confused with a run-out period, which is simply extra time (usually 90 days) to submit receipts for expenses you already incurred during the plan year. A run-out period doesn’t let you spend money on new services.
Which FSA Types Allow Carryover
Carryover applies only to health care FSAs, not dependent care FSAs. If you have a dependent care FSA, your plan may offer a grace period instead, giving you until March 15 to incur eligible child or elder care expenses using the prior year’s balance. But there’s no option to roll dependent care funds into the next year.
Limited-purpose FSAs, which cover only dental and vision expenses, can also offer carryover. These accounts follow the same $660 maximum for 2025, and some plans set a minimum carryover threshold (commonly around $30). Balances below the minimum or above the maximum are forfeited.
Your Employer Controls the Details
The IRS sets the maximum carryover amount, but your employer decides whether to offer carryover at all. They can also set a lower cap than the IRS maximum. Some plans allow the full $660, others cap it at $500, and many plans still don’t offer carryover or a grace period, sticking with the original use-it-or-lose-it rule.
Check your plan documents or ask your benefits administrator during open enrollment. This is especially important if you’re estimating how much to contribute for the coming year. Knowing whether you’ll have carryover changes the math on how aggressively you need to spend down your balance before December.
What Happens to Forfeited Funds
Any unused FSA money that exceeds the carryover limit is permanently forfeited. You can’t cash it out, convert it to another benefit, or roll it into an HSA. The IRS is explicit on this point: unused health FSA amounts cannot be converted to any other taxable or nontaxable benefit. If you leave your job, any remaining FSA balance is also forfeited unless you elect COBRA continuation coverage for the FSA.
How Carryover Affects HSA Eligibility
This is where carryover can create an unexpected problem. If you’re enrolled in a high-deductible health plan and want to contribute to a health savings account, carrying over a balance in a general-purpose health care FSA makes you ineligible to contribute to an HSA. The IRS treats having access to a general-purpose FSA balance as disqualifying coverage, even if you don’t actually use it.
There are two workarounds. First, you can spend your FSA balance down to zero before the plan year ends, which eliminates the carryover entirely. Second, if your employer offers a limited-purpose FSA (dental and vision only), you can carry over funds in that account without jeopardizing your HSA eligibility. A limited-purpose FSA is specifically designed to be compatible with an HSA.
If you’re considering switching to an HSA-eligible plan during open enrollment, pay close attention to your current FSA balance. Even a small carryover from a general-purpose health care FSA can block your HSA contributions for the following year.
How to Plan Around the Carryover Limit
Knowing the carryover limit helps you budget your FSA contributions more accurately. If your plan allows the full $660 carryover, you have a built-in safety net. You don’t need to predict your medical expenses down to the dollar, because modest overcontributions won’t be lost.
A practical approach: estimate your expected medical, dental, and vision expenses for the year, then feel comfortable contributing up to $660 more than that estimate. If you underspend, the excess rolls forward. If you spend exactly what you planned, you start the next year with a small cushion.
Keep in mind that carryover balances accumulate only up to the cap, not beyond it. You can’t stack $660 from one year on top of $660 from the prior year to build a growing balance. The total carryover into any given plan year is capped at the IRS limit for that year, regardless of how much rolled over previously.