Guide · Updated October 30, 2026
FSA grace period vs. carryover: what's the difference?
Both rules soften the FSA use-it-or-lose-it rule, but in different ways. A grace period gives you more time to spend your whole balance. A carryover lets you keep part of the money for next year. Your plan can offer one or the other, but not both.
The difference in one table
| Grace period | Carryover | |
|---|---|---|
| What you get | Extra time after the plan year ends | Part of your balance moves to next year |
| How much | Your whole remaining balance | Up to $680 from plan years starting in 2026 ($660 from 2025) |
| How long | Up to 2½ months: through March 15, 2027 for a calendar-year 2026 plan | All of the next plan year |
| What's forfeited | Anything left when the grace period ends | Anything above the carryover amount at plan year end |
| Set by | Your employer, up to the 2½-month maximum | Your employer, up to the IRS maximum |
How a grace period works
With a grace period, the plan year still ends on its normal date, but you can keep using last year's money for new expenses for up to 2½ months after it. For a calendar-year plan, that means care you get or items you buy through March 15 can be paid from the previous year's balance.
Example: you have $500 left on December 31, 2026, and your plan has a full grace period. An eye exam and glasses on February 20, 2027 can be paid from that $500. Whatever is still left after March 15, 2027 is forfeited.
The grace period is all or nothing on time: there's no dollar cap, but there's a hard end date.
How a carryover works
With a carryover, your spending deadline stays at the end of the plan year. After that, part of your unused balance is added to next year's account instead of being forfeited. The IRS sets the maximum each year; for plan years starting in 2026, it's $680. Your employer can choose a lower amount.
Example: you have $900 left on December 31, 2026, and your plan allows the full carryover. $680 moves into your 2027 account, and the other $220 is forfeited. The $680 doesn't count toward your 2027 contribution limit.
The carryover is all or nothing on money: there's no extra time, but part of your balance survives.
Which one does my plan have?
It depends on your employer. Some plans have a grace period, some have a carryover, and many have neither, in which case December 31 is a hard deadline for a calendar-year plan. To find out:
- Look in your benefits portal or open enrollment materials for "grace period", "carryover" or "rollover".
- Check the Summary Plan Description (SPD) for your FSA.
- Call or message your FSA administrator, the company named on your FSA card.
Tallydown handles both. Tell it whether your plan has a grace period, a carryover or neither, and it counts down to the right date and shows how much is actually at risk.
Spending strategy for each
If your plan has a grace period
You have until mid-March, but don't plan on it. Appointments booked for the grace period are easy to push back and miss. Aim to spend most of your balance by December 31 and treat the grace period as a safety net.
If your plan has a carryover
Spend down to the carryover amount by December 31. For example, with a $680 carryover and a $1,000 balance, make sure at least $320 is spent this year.
If your plan has neither
December 31 is your last day. Book eye and dental appointments early, refill prescriptions, and restock eligible supplies before the year ends. The list of FSA-eligible expenses has ideas.
Run-out period: not the same thing
A run-out period is extra time to file claims for expenses you already had during the plan year. It doesn't give you more time to spend, and it doesn't save any money. Most plans have one alongside a grace period or carryover. See the FSA deadline guide for how the dates fit together.
2026 FSA limits
| Plan year | Contribution limit | Maximum carryover |
|---|---|---|
| 2025 | $3,300 | $660 |
| 2026 | $3,400 | $680 |
Sources
- IRS, Revenue Procedure 2025-32, section .15 (2026 limits)
- IRS, Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
Tallydown isn't tax, legal or medical advice. Your plan documents decide whether you have a grace period or carryover, and how long or how much.