Compliance FYI: IRS Announces Health FSA Limits for 2020

Compliance, Employee Benefits

On Wednesday, November 6, 2019, the Internal Revenue Service (IRS) released Revenue Procedure 2019-44, which officially raised the maximum health Flexible Spending Account (FSA) contribution limit to $2,750 per calendar year beginning in 2020.

This means that starting on January 1, 2020, the FSA contribution limits are:

Dependent Care$5,000$5,000
Transportation (Parking)$265/month$270/month
Transportation (Transit)$265/month$270/month

Key Takeaway

The increase goes into effect on January 1, but it is important to remember that organizations are not required to raise the contribution limit. Organizations with January 1 renewal dates who want to raise their FSA limit should contact their M3 Account Team, or the administrator of their Flexible Spending Account plan, to determine how to move forward. There may still be time to increase the maximum contribution to your plan to adjust for the new legal threshold.

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