The IRS has reversed its decision to reduce the 2018 HSA contribution limit for families. The $50 reduction was thought to be an overbearing challenge since it became applicable in March 2018, instead of at the beginning of the year. By this time, some may have already contributed the original maximum of $6,900, or made payroll elections through a cafeteria plan based on that amount. The financial and administrative burden associated with implementing the reduction was deemed significantly higher than any potential benefit.
As background, under the Tax Cuts and Jobs Act (“Tax Act”) the method of calculating the cost of living adjustments (COLAs) for fringe benefits was changed and some of the limits for 2018 were reduced from their original amount.
(as previously reduced under the Tax Act)
|Health Savings Account Limitations (HSAs)|
|HSA Contribution Limits|
If you had already begun making adjustments to your HSA or cafeteria plan based on the reduction, the IRS has given guidance on how to make any necessary corrections.
The 2018 reduction for Adoption Assistance Programs did not change. Please see below.
(under the Tax Act)
|Adoption Assistance Programs|
|Employer-Provided Programs Only|
|Maximum amounts excluded pre-tax from gross income or maximum adoption credit||$13,840||$13,810|
Under an adoption assistance program, the exclusion and the credit will begin to be phased out for individuals with an adjusted gross income (AGI) greater than $207,140 (reduced from $207,580) and will be entirely phased out for individuals with an AGI of $247,140 or more (reduced from $247,580).
For questions as to how these limits apply to your plan or potential HSA corrections, please contact your Nyhart consultant.