IRS Issues Guidance on Taxability of DCAP Benefits for 2021, 2022

General Rules

  • Carryovers of unused DCAP amounts typically are not permitted, although a 2½ month grace period is allowed.
  • However, recent coronavirus-related relief allows employers to amend their plans to permit the carryover of unused DCAP amounts to plan years ending in 2021 and 2022, or to extend the permissible grace period to plan years over the same period.

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