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.

The following email will be sent to employers with the BESTflex Plan Health Care FSA:
Health Care FSA Limit Increase for 2020
The IRS has announced inflation adjustments for 2020 in Revenue Procedure 2019-44. This includes the Health Care Flexible Spending Account (Health Care FSA) limit for 2020, which increases to $2,750.

Keep in mind

·    The Health Care FSA pre-tax deduction limit is per employee, per employer, per plan year.

·    The limit change applies to the first plan year on or after January 1, 2020.

·    The change represents a $50 increase from the existing 2019 limit.

What should I do?

[For employers who have their BESTflex Health Care FSA limit(s) set at the statutory maximum, the following text will be included:

Your BESTflex Plan Health Care FSA is set to automatically adjust when statutory maximum limits change. That means the new statutory maximum of $2,750 will automatically be available for employees enrolling in BESTflex Health Care FSAs for 2020.

If your employees already made a Health Care FSA election in the process of 2020 enrollment, you may allow them to revise their election amount prior to the start of the plan year.] [For employers who have their BESTflex Health Care FSA limit(s) set at a fixed dollar amount, the following text will be included:

Your BESTflex Health Care FSA has a fixed dollar limit. That means you can either:

·    Take advantage of the increased annual maximum. To do this, you must complete an amendment to adopt the increase to the maximum ($2,750) as part of your plan.

·    Keep the same fixed dollar amount you currently have. You are under no obligation to adopt the new annual maximum.]

If your Health Care FSA plan limit changes for any reason, you are required to re-distribute My Company Plan to your plan participants. Have any questions? I’m here to help.

Thank you for choosing Employee Benefits Corporation

Client Service Consultant (Name and Contact Information)

The following email will be sent to employers with CommuteEase:
Parking and Transit Limits for 2020
The IRS has announced inflation adjustments for 2020 in Revenue Procedure 2019-44. This includes the limits for IRC Section 132 Parking and Transit accounts.

Qualified Transportation Plan limits for both Parking and Transit Accounts like those available through CommuteEase are increasing by $5 per month in 2020, to $270 per month. This change will automatically be applied to your CommuteEase plan.

·    Qualified Parking limit: $270 per month

·    Qualified Transit or Vanpooling limit: $270 per month

Important Reminders:

·    The dollar amount limits for a qualified Transportation Plan include any employer and employee 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)