IRS Announces 2020 Health FSA & Transportation Plan Limits
On 11/6/2019, the IRS officially announced the adjusted 2020 limits for Health Care flexible spending accounts (FSAs) and the Parking and Transit account limits.
The pre-tax salary reduction limit for Health Care FSAs will increase to $2,750 for plan years on or after January 1, 2020.
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 $2,750 available per plan year to reimburse qualified medical expenses if the employer contribution is part of the plan design. If an employer has adopted the option of up to $500 rollover 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 2020 each increase to $270 per month.
To review the full update to the 2020 tax provisions please refer to Revenue Procedure 2019-44.