Quick Answer
The carryover limit travels with the plan year the money came from. Up to $680 of an unused 2026 balance can carry into 2027 (Revenue Procedure 2025-32); $660 was the most a 2025 plan year could send into 2026 (Revenue Procedure 2024-40). Carryover is optional — your employer must elect to offer it, may offer a 2.5-month grace period instead, and cannot offer both. If your employer offers neither, all unspent funds are forfeited when the plan year ends.
If you are looking at an unused balance in a 2026 plan year, the figure you need is $680 — that is the most that can roll into 2027 if your employer offers carryover. The widely-quoted $660 is a different number: it is the most a 2025 plan year could send into 2026. Nearly every guide states one of these without saying which direction it runs, which is why so many people plan around the wrong figure. Here is the complete picture, including the grace-period alternative, the employers who offer neither, and the re-enrollment condition that can cost you the carryover entirely.
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How Much Can I Carry Over from My FSA in 2026?
For plan years beginning in 2026, the IRS allows employers to let participants carry over up to $680 of unused FSA funds into the next plan year, per IRS Revenue Procedure 2025-32. This is the number to use if you are looking at a balance right now. The carryover limit travels with the plan year the money came from, which is where most guides go wrong: $660 was the most you could bring into 2026 from a 2025 plan year (Revenue Procedure 2024-40), while $680 is the most a 2026 plan year can send into 2027.
Key details:
- The $680 carryover is optional — your employer must elect to offer it, and many do not.
- The carried-over amount does not count against next year's $3,400 contribution limit. A 2026 participant who brought the 2025 maximum forward could have had $4,060 available ($660 carryover from 2025 plus a $3,400 election for 2026).
- Carryover funds are available immediately at the start of the new plan year.
- There's no "use it first" rule — carryover and new contributions are pooled together.
What Is the Difference Between FSA Carryover and Grace Period?
Employers can offer one, the other, or neither — but not both. Here's how they compare:
| Feature | Carryover | Grace Period |
|---|---|---|
| What it does | Rolls up to $680 into next plan year | Extends spending deadline by 2.5 months |
| Dollar limit | $680 maximum (out of a 2026 plan year) | No dollar limit — full balance eligible |
| Time limit | No time pressure — funds available all next year | Must spend by March 15 (for calendar-year plans) |
| Forfeiture risk | Any amount above $680 is forfeited | Full balance forfeited if not spent by grace period end |
| Availability | Employer's choice | Employer's choice |
Which Is Better: FSA Carryover or Grace Period?
It depends on your situation:
- Carryover is better if you tend to have small leftover balances ($680 or less) and want zero time pressure.
- Grace period is better if you sometimes have large leftover balances and can realistically spend them within 2.5 extra months.
In practice, the carryover is more popular with employers because it's simpler to administer. According to Mercer's National Survey of Employer-Sponsored Health Plans, approximately 65% of employers who offer forfeiture protection choose carryover over the grace period.
What Happens If My Employer Offers Neither Carryover Nor Grace Period?
Some employers offer neither carryover nor grace period. In that case, the traditional "use it or lose it" rule applies — any unspent balance at the end of your plan year (typically December 31) is forfeited. Period.
If this is your situation, careful contribution planning is even more critical. Consider contributing conservatively and tracking your spending closely throughout the year.
Where Does Forfeited FSA Money Go?
When FSA money is forfeited, it goes back to your employer. Employers can use forfeited funds to offset plan administration costs or reduce future contributions to the plan. In some cases, forfeited FSA funds are used to offset premiums.
According to EBRI estimates, Americans collectively forfeit approximately $4.5 billion in FSA funds per year.
How Can I Avoid Losing My FSA Balance?
- Know your plan rules. Check whether your employer offers carryover, grace period, or neither. Your benefits portal or HR department can confirm this.
- Track your balance monthly. Don't wait until December to check how much you've spent. Monthly check-ins keep you on track.
- Front-load larger expenses. Schedule dental cleanings, eye exams, and other planned care early in the year so you know your remaining balance sooner.
- Stock up on eligible items. Sunscreen (SPF 15+), OTC medications, first aid supplies, and contact lens solution are all FSA-eligible and non-perishable. Buy a year's supply before your deadline.
- Consider high-value purchases. If your balance is large, look into prescription sunglasses ($150-500), orthotics ($200-800), LASIK consultations, or a new pair of prescription eyeglasses.
What Happens to My FSA Carryover If I Leave My Job?
Do I lose my FSA if I change employers?
Generally, you forfeit any remaining FSA balance (including carryover) when you leave your employer. However, you have until your termination date to submit claims for expenses incurred before you left. Some plans allow a run-out period of 30-90 days after termination to submit claims.
Can I change my FSA contribution mid-year?
Only if you experience a qualifying life event (marriage, divorce, birth of a child, change in employment status). Otherwise, your election is locked for the plan year.
Does COBRA affect FSA carryover?
You can elect COBRA continuation for your healthcare FSA, but you'll need to pay the full contribution amount (no employer subsidy). Most people don't find this cost-effective unless they have significant planned medical expenses.
How Do I Track My FSA Carryover and Deadlines?
The easiest way to avoid forfeiture is to know exactly where you stand at all times. SpendRebel monitors your FSA balance, calculates your daily burn rate, and sends escalating reminders as your deadline approaches. It's free — set it up in 2 minutes and stop losing money.
Frequently Asked Questions
Does the FSA carryover count against my next year's contribution limit?
No. The $660 carryover is in addition to your new contribution limit. For 2026, you could have up to $4,060 available ($660 carryover from 2025 + $3,400 new election for 2026).
Is the FSA carryover automatic or do I have to request it?
This depends on your plan, and assuming the wrong answer is one of the most expensive mistakes in FSA administration. Many plans do move the balance forward automatically, enrolling you at a $0 election if you do not re-enroll. Others make the carryover conditional on an active election for the new plan year — often a $100 minimum — and forfeit the carryover if you skip open enrollment. FSAFEDS works this way for federal employees. Anything above the cap is forfeited either way. Check your Summary Plan Description, or ask HR directly, before your enrollment window closes: a minimum election is cheap insurance on a balance of up to $680.
Can my employer offer both carryover and a grace period?
No. IRS rules prohibit offering both. Your employer must choose one or the other (or neither). Check your Summary Plan Description or ask your HR department which option applies to your plan.
What is the FSA carryover limit for 2025 vs 2026?
State the direction or the numbers are meaningless. The cap is set by the plan year the money leaves: a 2025 plan year could send up to $660 into 2026 (Revenue Procedure 2024-40), and a 2026 plan year can send up to $680 into 2027 (Revenue Procedure 2025-32). So if you are holding an unused 2026 balance, $680 is your number. The IRS had not published the 2027 figure as of early November 2026, so anything quoted for a 2027 plan year is a projection rather than a rule.