Good news if you use dependent care! The Internal Revenue Service (IRS) has increased the 2021 annual maximum for the Dependent Care Expense Accounts (DCEA) to $10,500 for families ($5,250 for married filing single). To start a DCEA account or increase your 2021 elections, complete the 121 Benefits Change in Participation form and email it to segip.mmb@state.mn.us. 

Here are a few things to note:

• Choosing to increase your 2021 election will increase the pre-tax deductions taken from your payroll checks for the remainder of the year. Since we’re half-way through the year, these amounts will be higher than if they were elected at the start of 2021. 
  
  
• You can use these contributions to pay for eligible expenses dating back to Jan. 1, 2021, so long as you were eligible to participate in the plan at that time.
  
  
• As of now, the $10,500 maximum is for tax year 2021 only. The maximum for 2022 will return to $5,000.
  
  
• You can carry over up to $15,500 of unused DCEA contributions to 2022. This includes:
  • $5,000 unused contributions that were carried over from 2020
  • $10,500 of your unused contributions from 2021
    
    
• Federal regulations does not currently allow a DCEA carryover from 2022 into 2023.

Learn more about pre-tax benefits. If you have questions, please contact 121 Benefits at 612-877-4321 or talk to your tax advisor.