Can an employer contribute to an employee’s FSA?

Yes, but to maintain the tax-exempt status for both the employer’s and employee’s contributions, an employer’s contribution is limited. This answer applies to Health FSAs only.

Employers can match an employee’s pre-tax contribution to their FSA (Flexible Spending Arrangement) up to the maximum amount the employee is permitted to contribute. If the employee contributes less than $500, the employer is permitted to contribute more than the employee, but only up to $500. Examples best illustrate the rule. If an employee contributes these amounts to their Health FSA:

• $300. The employer is permitted to contribute any amount up to and including $500.
• $1,500. The employer is permitted to contribute any amount up to and including $1,500.
• $2,700 (the maximum allowable employee contribution for 2019). The employer is permitted to contribute any amount up to and including $2,700.

This article from the Society for Human Resource Managers is an excellent source of information regarding FSA’s. See the section “Employee and Employer Funding.”