|The IRS has announced annual inflation adjustments in Revenue Procedure 2019-44. Notable changes include the following for 2020 benefits plans:
· Health Care Flexible Spending Account (Health Care FSA): The Health Care FSA annual limit under IRC § 125 cafeteria plans is increasing to $2,750 maximum for 2020.
· Parking and Transit Accounts: The monthly limits for qualified Transportation Plan benefits under IRC § 132 are increasing to $270 per month maximum for 2020.
Employers affected by these changes will be notified in an email.
Details: Health Care FSA Limit
· The new limit for Health Care FSAs like the BESTflex Plan is $2,750 per plan year for participating employees and applies to the first plan year occurring on or after January 1, 2020
· This is a $50 increase from the existing 2019 limit
· The limit applies per employee, per employer, per plan year
· For employers who have their BESTflex Health Care FSA limit(s) set at the statutory maximum, the new limit automatically applies in 2020
· If an employer has not chosen the statutory maximum but wants to use the new Health Care FSA limit, the employer may amend the cafeteria plan to make the change
· Employers are not required to change their plans to reflect the new 2020 limit and may keep their existing Health Care FSA plan dollar amount limit
· Employers with the BESTflex Plan Health Care FSA will receive an email notifying them of the change and next step, and you can view a sample of this communication below
Details: Transportation Plan Limits
· Qualified Transportation Plan limits for both Parking and Transit Accounts are increasing to $270 per month during 2020
· Qualified Parking limit: $270 per month
· Qualified Transit or Vanpooling limit: $270 per month
· The limits for a qualified Transportation Plan like CommuteEase include any employer contributions to the Parking or Transit benefits
· Any employer contributions reduce the amount an employee can elect as a pre-tax amount for their Parking or Transit Benefits, unlike the pre-tax Health Care FSA maximum
· Employers who have CommuteEase will receive an email notifying them of the change, and you can view a sample of this communication below
Read more details about the Health Care FSA and Transportation Plan limit changes in Compliance Buzz.