The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the applicable dollar limits for health savings accounts and high-deductible health plans for 2020. Nearly all of the dollar limits currently in effect for 2019 will change for 2020.
See a comparison of the applicable dollar limits for HSAs and HDHPs for 2019 and 2020.
Recently the Internal Revenue Service (IRS) and the Social Security Administration announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2019. The table below compares the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2018 and 2019.*
UPDATE: On Thursday, November 11, 2018, the Internal Revenue Service announced that, for calendar year 2019, the annual maximum salary reduction limit for contributions to a health flexible spending account was increased by $50 to $2,700.
RETIREMENT PLAN LIMITS 2018 2019 Annual compensation limit $275,000 $280,000 401(k), 403(b) & 457(b) before-tax contributions $18,500 $19,000 Catch-up contributions (if age 50 or older) $6,000 $6,000 Highly compensated employee threshold $120,000 $125,000 Key employee officer compensation threshold $175,000 $180,000 Defined benefit plan annual benefit and accrual limit $220,000 $225,000 Defined contribution plan annual contribution limit $55,000 $56,000 Employee stock ownership plan (ESOP) limit for determining the lengthening of the general five-year distribution period $220,000 $225,000 ESOP limit for determining the maximum account balance subject to the general five-year distribution period $1,105,000 $1,130,000 HEALTH AND WELFARE PLAN LIMITS Health Flexible Spending Accounts Maximum salary reduction limit $2,650 $2,700 High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA) HDHP – Maximum annual out-of-pocket limit (excluding premiums): Self-only coverage $6,650 $6,750 Family coverage $13,300 $13,500 HDHP – Minimum annual deductible: Self-only coverage $1,350 $1,350 Family coverage $2,700 $2,700 HSA – Annual contribution limit: Self-only coverage $3,450 $3,500 Family coverage $6,900 $7,000 Catch-up contributions (age 55 or older) $1,000 $1,000 SOCIAL SECURITY WAGE BASE Social Security Maximum Taxable Earnings (dollars) $128,400 $132,900
Plan sponsors should update payroll and plan administration systems for the 2019 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.
For further information about applying the new employee benefit plan limits for 2019, contact your regular McDermott lawyer.
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*The dollar limits are generally applied on a calendar year basis; however, certain dollar limits are applied on a plan-year, tax-year, or limitation-year basis.
On May 10, 2018, the IRS announced cost-of-living adjustments to the applicable dollar limits for health savings accounts and high-deductible health plans for 2019. Many of the limits will change for 2019.
On Monday, November 27, 2017, the Social Security Administration announced (announcement here) that the it is lowering the maximum amount of earnings subject to the Social Security tax for 2018 to $128,400. The Social Security Administration had previously announced the amount as $128,700. The revision is the result of updated wage data reported to Social Security. Our On The Subject article has been updated to reflect the lower amount.
The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2018. Although some of the dollar limits currently in effect for 2017 will remain the same, the majority of the limits will experience minor increases for 2018.
In a recent webinar, Jake Mattinson and Sarah Raaii discussed the basics of health savings accounts (HSAs) and health flexible spending accounts. They provided an overview of the various regulations surrounding HSA, such as eligibility requirements, high deductible health plans, and contributions and distributions, and cafeteria plans. Additionally, they analyzed the differences between HSAs and Health FSAs and HRAs.
The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2015. Although many dollar limits currently in effect for 2014 will change, some limits will remain unchanged for 2015.
The Internal Revenue Service recently issued new guidance modifying the “use it or lose it” rule applicable to health flexible spending arrangements (FSAs) to allow carryover of certain unused health FSA amounts into the next plan year.
On October 31, 2013, the Internal Revenue Service (IRS) issued Notice 2013-71, which modifies the existing requirement that unused amounts in a health flexible spending arrangement (FSA) at the end of a plan year (or applicable grace period) must be forfeited. This new guidance permits an employer to amend its cafeteria plan, effective as early as the 2013 plan year, to allow up to $500 of unused amounts as of the end of the plan year to be carried forward for use in the following plan year. The tradeoff is that a health FSA cannot have both a grace period and a carryover feature; it is one or the other.
Carryover of Certain Unused Amounts Permitted
The “use it or lose it” rule applicable to health FSAs requires unused amounts remaining in a health FSA at the end of a plan year (or applicable grace period) to be forfeited. The new guidance now permits an employer to amend its plan to allow for up to $500 of unused amounts remaining in a health FSA at the end of a plan year to be carried forward to reimburse eligible expenses incurred in the next following plan year. While the employer can elect to allow less than $500 to be carried over into the next following plan year, the same carryover limit must apply to all plan participants. This $500 permitted carryover feature does not affect the $2,500 annual health FSA limit imposed by the Affordable Care Act. Thus, a participant with $500 remaining unused in his or her health FSA at the end of a plan year may be permitted to carryover the $500 into the next plan year, in addition to a maximum contribution of $2,500, for a potential total of $3,000 available reimbursement that next following plan year.
Under prior IRS guidance, health FSAs are permitted to include a two-month and 15-day grace period after the end of the plan year, during which a health FSA participant can incur eligible expenses and use the amounts contributed for the previous year to pay those expenses. The new guidance specifies that a plan that is amended to provide for the carryover of unused health FSA amounts into the following plan year cannot also have a grace period in place for that following plan year. Thus, an employer amending its plan to allow for carryover of unused health FSA amounts may also need to amend the plan to remove any existing grace period feature.
Deadline for Plan Amendments Allowing Carryover
Under the new guidance, an employer electing to allow for carryover of unused health FSA amounts must amend its plan to permit the carryover. This amendment must be adopted on or before the last day of the plan year from which amounts can be carried [...]
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The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2014. Although many dollar limits currently in effect for 2013 will change, some limits will remain unchanged for 2014. This On the Subject provides a chart of these 2014 cost-of-living changes.
To read the full article, click here.
by Raymond M. Fernando, Diane M. Morgenthaler and Adrienne Walker Porter
The IRS recently announced the 2012 cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans. Plan sponsors should update payroll and plan administration systems for the new 2012 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions. Also, because 2012 marks the first year that the IRS has increased employee benefit plan limits since 2009, plan sponsors may want to consider updating plan documents to include the new cost-of-living adjustments, to the extent such adjustments are not automatically incorporated by cross-reference. Please click here for a full list of the 2012 IRS limits.
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