I have an employee who was transferred from our UT office to our KY office mid-year. He had been incurring dependent care expenses in UT and had enrolled in the Dependent Care FSA during open enrollment 1/1/00. Because of his transfer from UT to KY, his wife is no longer working and is keeping the children at home. Does this qualify as a change of status and allow him to terminate his contributions to the FSA?

Absolutely. Termination of spouse's employment is a reason to stop contributions to a dependent care account. In fact, the employee should be able to stop contributions to account if spouse quit working even if they didn't move from UT to KY.