Another Update from the IRS: FSA Contribution Limit Increase for 2019

 November 26 2018     Diane Cross

As anticipated, the 2019 maximum contribution limit for health flexible spending accounts (FSAs) is $2,700 (up $50 from $2,650 in 2018).  Recently, the IRS released annual inflation adjustments via Revenue Procedure 2019-57, which included an adjustment for FSAs. 

For 2019, employees can elect up to a $2,700 salary reduction for contributions to their FSAs if their employers allow.  While the IRS adjusts the maximum contribution limit each year due to inflation, an employer is not required to apply the new limit to its FSA.  And, given the timing of this announcement, some employers have already completed open enrollment and may choose to keep their current contribution limit.  

Keep in mind that Section 125 plan documents must include the limit on FSA salary reductions - whether it is the maximum contribution limit set by the IRS or a lower limit selected by the employer.  That said, for those employers adopting the new limit, the Section 125 plan document should be updated as needed to reflect the new limit and changes to the limit should be communicated with employees. Please contact your HORAN representative with questions.