Flexible Spending Account (FSA)

An FSA lets you set aside pre-tax salary for medical or dependent care costs, saving your marginal rate plus payroll tax. Its defining constraint is use-it-or-lose-it: unspent money is generally forfeited at year end, with only a small carryover or grace period allowed. The full annual election is available from day one, though — an interest-free advance that survives even if you leave mid-year.