A Flexible Spending Account (FSA) is a pre-tax employer-sponsored account for medical or dependent care expenses. Medical FSA limit: $3,300 in 2026; Dependent Care FSA limit: $5,000. Unlike HSAs, FSAs are typically 'use-it-or-lose-it' — unused balances expire at year-end (with possible grace period or $640 carryover). FSAs don't require an HDHP. Best used for predictable expenses: routine medical bills, eligible dependent care (daycare, after-school care for kids under 13). The pre-tax savings is meaningful — a $3,300 medical FSA saves $792 at a 24% marginal rate. Plan contributions carefully to avoid forfeiture.
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August 22, 2026 · Aditya Gupta
Investing
Related terms
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A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
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