Q.- We offer employees the opportunity to participate in a health flexible spending account plan. We contribute $3,000 to each employee's FSA. I know there are new limits on FSA contributions. Can we continue to contribute to the FSA?
A.- Yes. The $2,500 health FSA contribution limit applies to salary reduction contributions, only. It does not apply to nonelective employer contributions that the employee may not otherwise get in cash. An employer may make a $3,000 contribution to an FSA, so long as the employees cannot get a portion of that $3,000 in cash outside of the FSA. Employees may also contribute to the FSA, up to the $2,500 limit (or lower limit, depending on your plan's design).
