IRS Announces 2019 Health FSA and Transportation Plan Limits
Today the IRS officially announced under, Revenue Procedure 2018-57 the 2019 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules, and other tax changes. Included in the announcement is the inflation adjusted 2019 limits for Health Care flexible spending accounts (FSAs) under an IRC §125 cafeteria plan and the Parking and Transit account limits under an IRC §132 Transportation Plan.
The pre-tax salary reduction limit for Health Care FSAs will increase to $2,700 for plan years on or after January 1, 2019.
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 reductions. As a result, the employee could have more than $2,700 available per plan year to reimburse qualified medical expenses if the employer contribution is part of the plan design.
In addition, if an employer has adopted the up to $500 rollover (carryover) 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 2019 each increase to $265 per month.
Unlike the pre-tax Health Care FSA maximum, the limits under a Transportation plan will include any employer contribution towards the Parking or Transit Benefits. Therefore, any employer contribution reduces the amount an employee can elect as a pre-tax amount for their Parking or Transit Benefits.
For a complete review of the updates to the 2019 tax provisions refer to Revenue Procedure 2018-57.