Special Report: Flexible Spending Accounts

Out with the old, in with the new. Come New Year’s Eve, it's say hello to 2005 and say good-bye to your flexible spending account.

Lauren Gadkowski, Certified Financial Planner
"You have until the 31st to spend it or it gets wiped out and you start over again in January."

And with less than a week away - experts suggest flex spenders be creative with their cash. Patricia Rahmankhah needed to empty her account, so she spent it on three thousand dollars worth of dental work.

Patricia Rahmankhah, Flexible spender
"One of the reasons I like the plan is because it was deducted from payment."

But dental work is just the beginning. A flexible savings account or FSA is also a great way to save up on over the counter medication, birth control, fertility treatments, chiropractic care and more.

Lauren Gadkowski, Certified Financial Planner
"People who wear glasses or contact lenses, people who use physical therapy, the expenses of joining a weight loss program or gym."

Boston certified financial planner Lauren Gadkowski says the FSA works a lot like your 401k.

Lauren Gadkowski, Certified Financial Planner
"You get to do allocate a certain dollar amount and that money is removed from your salary on a pre-taxed basis."

She says it's are a great way to lower taxable income the have the money you need for medical necessities--but remember-- it has to be something the doctor ordered.

Lauren Gadkowski, Certified Financial Planner
"Anything that's preventative that will help you to stay healthy or keep you on track they are willing to back up."

And can you believe big screens and surround sounds?

Lauren Gadkowski, Certified Financial Planner
"People who can't read - large print books, big screen TVs, speaker systems that are going to enhance you life - hearing aids things like that."

Even pets --if proven medically necessary.

Lauren Gadkowski, Certified Financial Planner
"If you are seeing a therapist who says you should get a pet to get better or a seeing-eye dog."

As for Pat, she's glad she didn't waste her flexible savings account.

Patricia Rahmankhah, Flexible spender
"It feels great. I’m very glad I did it."

And her new dental work is finally giving her something to smile about.

Also remember the cost of using your car to drive to medical appointments is deductible.

For more information:

Lauren Gadkowski, CFP
Beacon Financial Planning, Inc.
60 State Street, 38th Floor
Boston, MA 02109
P:(617) 523-4666
F: (617) 523-6333
lauren@beaconfinancialplanning.com
http://www.beaconfinancialplanning.com

U.S. Department of Labor
http://www.bls.gov/opub/cwc/cm20031022ar01p1.htm