The Vita Blog November 2019

Overview

The Internal Revenue Service recently announced annual inflation adjustments for 2020. IRS Rev. Proc. 2019-44 provides that for taxable years beginning in 2020, the following maximums apply for Health Flexible Spending Arrangements, Adoption Assistance Programs, and Commuter Benefits.

Health FSA Limit: The annual Health FSA limit will increase from $2,700 in 2019 to $2,750 in 2020.

Adoption Assistance Limit: The annual Adoption Assistance limit will increase from $14,080 in 2019 to $14,300 in 2020.

Commuter Benefits Limits: The monthly transit and parking limits will both increase from $265 in 2019 to $270 in 2020. 

If you are a Vita Flex FSA Client who currently offers the IRS maximum and your plan renews January 1, 2020, your limits have been automatically increased for the 2020 plan year, unless you have previously requested otherwise. Any participant that has already made an election at the previous maximum will be contacted in order to confirm their desired election amount.

If you are a Vita Flex Commuter Benefits Client, the monthly pre-tax limit will be automatically increased to the IRS maximum for the January benefit month.

2020 Health Savings Account (HSA) Limits
2020 Retirement Plan Limits

Overview
The Internal Revenue Service has announced the 2020 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans.  The Social Security Administration (SSA) has also announced the taxable wage base for 2020.

Definitions
Elective Deferral Limit means the maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).

Catch-up Contributions refers to the additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits. Catch-up contributions were initiated under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and made permanent by the Pension Protection Act.

Annual Contribution Limit means the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation, and is applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account.

Annual Compensation Limit means the maximum compensation amount that can be considered in calculating contribution allocations and non-discrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).

Highly Compensated Employee Threshold means the minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).

Social Security Wage Base is the maximum amount of earnings subject to Social Security payroll taxes.

2020 Health Savings Account (HSA) Limits
2020 Pre-Tax Contribution Limits