2019 FSA Limits

Any idea when they coming out? Have been holding up the open enrollment process waiting for the new "official" rates.

Already released.  $3,500 individual and $7,000 family.

I think that's for HSA's not FSA's.

It will be $2,700, but just like the rest of the limits, we are still waiting for the IRS to announce officially; 2 weeks overdue and counting...

1 hour ago, XTitan said:

It will be $2,700, but just like the rest of the limits, we are still waiting for the IRS to announce officially; 2 weeks overdue and counting...

Really?  I do not do much 125 work, but I did receive information from 2 different tpa’s with the new numbers.  Oh well, live and learn.  Thanks.

Just as we were graced this morning with the Bakers' helpful posting about the retirement plans' limits, we'll look forward to BenefitsLink's news when the $2,700 for flexible spending accounts becomes official.

Does anyone have any updates on this topic? Have the FSA limits been announced officially?

Still nothing.  One reason for the hold-up is very likely that, due to TCJA, the FSA limit is now tied to the chained CPI-U, and there is some ambiguity in the application of the new rate.  Last year, Revenue Procedure 2017-58 was released mid-October, so clearly this is overdue. 

Xtitan, will you elaborate what is meant by "the FSA limit is now tied to the chained CPI-U, and there is some ambiguity in the application of the new rate"?   

Every year, the IRS and Treasury release a Revenue Procedure with inflation linked adjustments to certain tax items that is separate from the Notice that discusses the changes to the qualified plan limits.  For example, Revenue Procedure 2017-58 was released last year in mid-October and contained 56 different inflation-adjusted tax items, including the tax brackets, standard deduction, personal exemptions, earned income credit, etc.  These inflation adjustments were tied to the CPI-U.

The Tax Cuts and Jobs Act was passed last December, and among other changes, replaced certain inflation adjustments (including the calculation for the next FSA limit) that were tied to the CPI-U to the C-CPI-U.  That rate actually became known in mid-September, but it is not entirely clear how to apply the new rate to existing calculations. So, while $2,700 seem to be the limit, and I've seen others use this rate, we don't have the official announcement, so I am speculating that those who are responsible for calculating the limit officially need some internal guidance. 

1 minute ago, XTitan said:

Every year, the IRS and Treasury release a Revenue Procedure with inflation linked adjustments to certain tax items that is separate from the Notice that discusses the changes to the qualified plan limits.  For example, Revenue Procedure 2017-58 was released last year in mid-October and contained 56 different inflation-adjusted tax items, including the tax brackets, standard deduction, personal exemptions, earned income credit, etc.  These inflation adjustments were tied to the CPI-U.

The Tax Cuts and Jobs Act was passed last December, and among other changes, replaced certain inflation adjustments (including the calculation for the next FSA limit) that were tied to the CPI-U to the C-CPI-U.  That rate actually became known in mid-September, but it is not entirely clear how to apply the new rate to existing calculations. So, while $2,700 seem to be the limit, and I've seen others use this rate, we don't have the official announcement, so I am speculating that those who are responsible for calculating the limit officially need some internal guidance. 

Thanks XTitan. I understood inflation-adjustment #s released in September were what Thomson Reuters used to calculate the expected increase to $2,700 and that generally around the 3rd Thursday in October is when the IRS releases the official health FSA rate.

I wasn't aware the TCJA changed the process for how the inflation adjustments were used. So I haven't had a good possible explanation for the delay.  It's been frustrating for clients because the IRS is delivering the FSA max limit change too late for them to adjust their printed OE guides...the only workaround I've been able to suggest is to print "estimated" or "projected" before or after the limit amount. 

In February, the IRS released Rev. Proc. 2018-18 (published in Internal Revenue Bulletin 2018-10 on March 5), which applied the budget-reconciliation act's Chained Consumer Price Index and redid some inflation adjustments previously announced in Rev. Proc. 2017-37 and Rev. Proc. 2017-58.  So the IRS has applied the new method at least once.

It's unclear whether there is an ambiguity or difficulty about adjusting the flexible-spending-account limit.

We now have a few weeks of participants getting communications that describe the limit as predicted but not established.  How have participants reacted to those communications?

$2,700 confirmed.

https://www.irs.gov/pub/irs-drop/rp-18-57.pdf

XTitan, thank you for posting this pointer.