Benefits Blog

IRS Announces New 2015 Flex Limits

Posted by on Friday, October 31, 2014 @ 09:20 PM

Yesterday the IRS announced annual inflation adjustments for forty tax provisions for 2015.  Here is a summary of the changes that affect Cafeteria and Flexible Spending accounts 

Various Limits Affecting Cafeteria, Flexible Spending Accounts, and Qualified Transportation Plans

 

2015

2014

Annual dollar limit on employee contributions to a Medical FSA

        $2,550

$2,500

Monthly limitation:  commuter highway vehicle and any transit pass

$130

$130

Monthly limitation: qualified parking

$250

$250

You will notice that the annual Medical FSA cap increased $50 to $2,550 for 2015. 

Does this change require an amendment to our Cafeteria Plan Document or Summary Plan Description?                                

Usually, these documents do not need to be amended because the language in your plan document or Summary Plan Description does not specifically reference the $2,500 limit, or, it describes the limit as the "maximum amount permitted under code section 125(i)".  However, other descriptive marketing material created by you may reference a $2,500 limit.  If so, these should be modified.

Most of my employees have already enrolled in the Medical FSA for 2015.  For those that elected the maximum of $2,500, can I automatically change their election to $2,550?

No, the Medical FSA election that your employees made is a specific election.  However, any calendar-year plans are still within the open-enrollment period.  Therefore, you could notify your employees that the Medical FSA cap has increased to $2,550 and allow the participants to modify their 2015 election.

Should I make any other changes?

Sometimes, payroll systems have a cap on the Medical FSA of $2,500, which would need to be changed for the 2015 election. 

Did the Daycare cap change as well?

No, the $5,000 Daycare cap is not indexed and therefore will not change unless  Congress changes the law.

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