We have an employee participating in our dependent care plan. The employee wants to pay for preschool tuition in full in Sept. for the school year 99-00. How will she be able to receive reimbursement? Should decisions be based on date of payment or date of daycare provided? What is the best way for the employee to 'pretax' as much money as possible?

The expense is incurred over two calendar years. Payment can be made in one year and recovered pretax in another year. Only that portion incurred in the current year may be recovered in the current year. By incurred I mean the dates of service. For those dates of service in the second of the two calendar years, reimbursement may be requested at that time. Elections wouldn't follow the school year however, each calendar year election is for the entire calendar year.

Thanks for your help in this matter! I was guessing we could prorate the tuition and apply it monthly creating an eligible amount for 1999 and 2000 separately. Just wanted to be confident this was the best way to go.