As others have said, the main downside is the risk of over contributing and forfeiting the money (happened a lot during covid because day cares closed). Also, it can be a hassle to get reimbursed - make sure to stay on top of the paperwork and don't miss deadlines.

Looks like you're right: https://www.consumerfinance.gov/ask-cfpb/is-a-money-market-account-insured-en-1007/#:~:text=Yes.,however%2C%20are%20not%20federally%20insured.

I was thinking of my money market account with Fidelity (my "core account"), which is probably not FDIC insured. But I don't expect my "investment" money to be insured, and it may lose value, so I'm OK with that.

I believe that typical "money market" accounts are not FDIC insured, while I know that the Ally savings account is. Given the state of the banking sector, and Ally's financial state in particular, I'm willing to sacrifice 0.25% for the knowledge that the FDIC is insuring all of my deposits.

EDIT: My assumption was incorrect; money market accounts by Ally are FDIC insured, so I'm also not seeing a substantive difference between the Ally savings and Ally money market account.