Reminder! ARPA Increases 2021 Dependent Care Account Limits

On Thursday, March 11, 2021, President Biden signed the The American Rescue Plan Act (ARPA) of 2021. The relief bill temporarily increases the maximum contribution amount for Dependent Care Assistance Plans (DCAP). For 2021, employees who participate in their employer’s DCAP plan may now contribute up to $10,500 annually (up from $5,000). Taxpayers who are married filing separately will see an increase from $2,500 to $5,250.  

The DCAP Increase Is Not Automatic

Employers will need to amend their DCAP plan to allow for the increased limit. The amendment can be retroactive so long as the amendment is adopted by the last day of the plan year in which the amendment is effective. OCA clients can quickly complete our online DCA Amendment Request form by clicking the amendment button above. Once the amendment has been processed, employers may permit their employees to update their DCA elections.  Note: If you have already completed the amendment request to increase the contribution limit, please disregard. OCA has already processed your request.