X


Let's Talk

Let us help you make
an informed decision
Required:

How can we help you?

Looking for client support?
Click here instead.

On November 6, 2019, the Internal Revenue Service (IRS) released Revenue Procedure 2019-44, which contains the 2020 limits for flexible spending accounts (FSAs), commuter and parking benefits, and the adoption assistance tax credit, among other limits. The dependent care FSA (DC FSA) limits have not increased for 2020.

For plan years beginning in 2020, the important IRS limits are outlined below:

BENEFITS 2020 LIMIT 2019 LIMIT
FSA $2,750 $2,700
Dependent Care FSA $5,000* $5,000*
Qualified Commuter/Parking Benefits $270/month $265/month
Adoption Assistance Tax Credit $14,300 $14,080

* Limit is $2,500 for an account holder who files their taxes “married filing separately”

 

As a reminder, the 2020 amounts for health saving account (HSA) and high deductible health plans (HDHP) were previously released in IRS Revenue Procedure 2019-25 in May of this year. The 2020 HSA and HDHP amounts are outlined below:

BENEFITS 2020 LIMIT (single/family) 2019 LIMIT (single/family)
HSA $3,550/ $7,100 $3,500/ $7,000
Minimum Annual HDHP Deductible $1,400/ $2,800 $1,350/ $2,700
Maximum Annual HDHP Deductible $6,900/ $13,800 $6,750/ $13,500

 

Employer Action Items:

  1. Employers should be aware of the new 2020 tax deductible limits and may want to allow employees to elect the maximum amounts.
  2. Employers with non-calendar year FSA plans that begin before January 1, 2020 are subject to the 2019 FSA limits and cannot increase FSA deductions to the 2020 limit.
  3. Employers with FSA plans that begin on or after January 1, 2020 may want to (but are not required to) allow their employees to increase their maximum FSA deduction to the 2020 limit of $2,750. Employers who choose to increase their maximum FSA deduction should communicate this change to their employees and ensure that their system is set up to allow for new elections.

 

he information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.