IRS Announced cost of living adjustments for plan benefits for 2016.
- Health FSAs. The dollar limit on employee salary reduction contributions to a health flexible spending account plan will remain at $2,550.
- Dependent Care FSAs. The dollar limit on employees salary reduction contributions to a dependent day care flexible spending account plan remains at $5000 or $2500 for married filing separately. There are some adjustments to the 2016 tax rates and earned income credits which impact the cost savings from participating in a dependent day care FSA.
- Qualified Transportation Fringe Benefits. The monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits will be $255, which is a $5 increase from the 2015 monthly limit. The combined monthly limit for transit passes and vanpooling expenses remains at $130.
- Adoption Assistance Exclusion and Adoption Credit. The maximum amount that may be excluded from an employee’s gross income under an employer-provided adoption assistance plan will be $13,460, which is $60 increase from the 2015 maximum. The maximum adoption credit allowed to an individual for the adoption of a child will be $13,460, a $60 increase from 2015. Both the exclusion and the credit will begin to be phased out for individuals with modified adjusted gross incomes greater than $201,920 and will be entirely phased out for individuals with modified adjusted gross incomes of $241,920 or more.
- Small Business Health Care Tax Credit. The average annual wage level at which the tax credit begins to phase out for eligible small employers is $25,900, which is a $100 increase from 2015.
- Archer MSAs. For Archer MSA-compatible high-deductible health coverage, the annual deductible for self-only coverage must not be less than $2,250, which is a $50 increase from 2015, or more than $3,350, which is a $50 increase from 2015. The out-of-pocket maximum remains at $4,450. For family coverage, the annual deductible must not be less than $4,450 or more than $6,700, which is a $50 increase from 2015, with an out-of-pocket maximum of $8,150
Retirement plan limits remain unchanged from 2015.
