Benefits and Compensation

IRS Raises FSA Contribution Limits, Other Thresholds for 2019

Employees will be able to contribute up to $2,700 to a health flexible spending account (FSA) in 2019, a $50 increase from the 2018 amount, the Internal Revenue Service (IRS) announced in Revenue Procedure 2018-57.

FSAThe IRS is raising to $225,000 (from $220,000) the annual compensation that makes a company’s employee, other than an officer, a “control employee” for commuting valuation purposes, the IRS announced separately in Notice 2018-83. For officers, the control employee threshold remains at $110,000.

The threshold that defines “highly compensated employee” under Section 414(q)(1)(B) is increasing from $120,000 to $125,000, and the dollar limit that defines a “key employee” in a top-heavy plan will now be $180,000 (formerly $175,000).

The year 2019 will see higher thresholds for adoption-related tax credits and exclusions. Rev. Proc. 2018-57 raises to $14,080 (from $13,840) the income exclusion and tax credit for qualifying adoption-related expenses. The income threshold at which the credit begins to be phased out now will be $211,160, vs. $207,580 in 2018.

The monthly limits on the qualified transportation fringe benefit, as well as the qualified parking benefit, also are being raised to $265, up from $260 in 2018. Congress enacted permanent parity between these two in December 2015.

Rev. Proc. 2017-58 raises certain long-term care (LTC) insurance premium amounts that will be deductible in 2017. The limit remains $420 for taxpayers aged 40 or younger, but the amounts increase for the other age groups, to a maximum of $5,270 for those older than 70. The per diem limitation on LTC insurance payments also increases, from $360 to $370.

The annual limit on payments and reimbursements under a qualified small employer health reimbursement arrangement was raised to $5,150 for self-only and $10,450 for family coverage, an increase of $100 and $200, respectively, from 2018 levels.

The 2019 contribution limits for health savings accounts (HSAs), along with the adjusted minimum deductibles and maximum out-of-pocket limits for HSA-eligible high-deductible health plans, were announced earlier this year.