The IRS has announced the annual dollar limit on contributions for health care flexible spending accounts (FSAs), health savings accounts (HSAs), and 401(k) accounts based on cost of living adjustments (COLAs). These limits are reviewed annually by the IRS. For the most part, the limits will not increase for 2016.
Health Care Flexible Spending Accounts (FSA): The maximum allowed amount that an employee can contribute to an employer-sponsored health care FSA will remain at $2,550 in 2016.
Health Savings Accounts (HSA): The maximum allowed contribution amount for individuals to a Health Savings Account will remain at $3,350. However, the limit for contributions for a family will increase in 2016, going from $6,650 to $6,750, an increase of $100.
401(k) Accounts: As before, employees will be able to contribute up to $18,000 for the year to their 401(k) account.
Employers that offer FSA, HSA and 401(k) accounts should ensure that they have communicated any increases to their employees if the employer decides to adopt the higher limits for 2016. Any increases may also require changes and revisions to existing written employer communications and to open enrollment materials.
Courtesy of Transcend Technologies Group, Inc.