On 11/6/2019, the IRS officially announced the
adjusted 2020 limits for Health Care flexible spending accounts (FSAs) and
the Parking and Transit account limits.
The pre-tax salary reduction limit for Health
Care FSAs will increase to $2,750 for plan years on or after January 1, 2020.
The Health Care FSA pre-tax salary reduction
limit is per employee, per employer, per plan year. If the employer contributes
to the Health Care FSA, the employer’s contribution is in addition to the
amount that the employee can elect to set aside through pre-tax salary
As a result, the employee could have more than
$2,750 available per plan year to reimburse qualified medical expenses if
the employer contribution is part of the plan design. If an employer has
adopted the option of up to $500 rollover for the Health Care FSA, any
amount that rolls over into the new plan year does not affect the maximum
election the employee can make.
For Transportation Plans, Parking and
Transit limits for 2020 each increase to $270 per month.
review the full update to the 2020 tax provisions please refer to Revenue Procedure 2019-44.