Dependent Care Reimbursement Account (DCRA)

BatesCollege

2006 Annual Enrollment

Important Considerations

•The College will provide a Dependent Care Subsidy if you make a minimum contribution of $100 to the Dependent Care Reimbursement Account (DCRA).

•You must complete the Dependent Care Subsidy Enrollment Form and include a copy of your 2004 income tax return to verify family income under 50,000. If not, you will be enrolled in the 50,000 and higher bracket (see Dependent Care Subsidy Enrollment form).

•The maximum contribution you can make to a DCRA is $5,000 (less any College Dependent Care Subsidy).

•The DCRA allows you to save taxes by paying for qualified child/adult care expenses with before-tax dollars. Due to tax savings IRS requires any unused contributions to be forfeited

•Note the DCRA does not reimburse you for any health care expenses of your dependents (health expenses are claimed through a Healthcare Reimbursement Account).

•You can receive reimbursement only up to the amount deposited in your account at any point within the year.

•Eligible expenses are those for care of children under the age of 13 that you claim on your income tax return or dependent (adult/child) who is incapable of self care – provided the care is necessary for you to work or attend school.

•Examples of eligible expenses include:

–Fees for day care provided by individuals or a day care center inside or outside your home;

–Costs for a nursery school or day camp;

–IRS Publication 503 has a complete list of eligible expenses.

New in 2006 Beginning with your contributions made in calendar year 2006 you will have until March 15th of the following calendar year to incur eligible expenses. For example, say that you elected to contribute $500 to the Dependent Care Reimbursement Account in 2006 and by December 31st you had incurred and claimed eligible expenses in the amount of $450. Under the current rules the remaining $50 would have been forfeited. However, beginning in 2006 you would have until March 15th of the following year, or until March 15, 2007, to incur another eligible expense to get the remaining $50 you had left from calendar year 2006 contributions.

Group Dynamic is changing the claim system so that in from January 1, 2007 through March 15, 2007 it would first look to see whether you had any unused amounts from 2006 from which to issue reimbursement before applying the expense against any 2007 contributions. Essentially this means that you now have 14 ½ months to use up any contributions that you make for 2006. Note that the deadlines for submitting expenses remains March 31st.