Which is true regarding a flexible spending account (FSA)?

Question

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Funds in an FSA are use-it-or-lose-it, meaning that any unused funds at the end of the plan year are forfeited. A is incorrect because the money deducted from an employee’s paycheck is not subject to taxes. B is incorrect because FSA funds cannot be withdrawn without penalty unless they are used for eligible healthcare expenses. D is incorrect because an FSA is not a managed care plan; it is a pretax benefit that allows employees to pay for eligible healthcare expenses.

Which Is True Regarding a Flexible Spending Account (FSA)