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|
|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:
- Employers should be aware of the new 2020 tax deductible limits and may want to allow employees to elect the maximum amounts.
- 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.
- 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.
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