The IRS has issued the cost-of-living adjusted figures for qualified plans and for several fringe benefits for 2015. Of particular interest to many employers are:
• An increase in the maximum employee contribution to a health flexible spending account (HFSA) to $2,550
• An increase in the 401(k) and 403(b) contribution limit to $18,000
• An increase in the 401(k) and 403(b) catch-up limit to $6,000
If you would like a summary of key annual limits, please request it here.
This relatively late notice of the 2015 HFSA limit may create issues for employers that have completed open enrollment. Employers that wish to increase the limit in their plan should read their plan document. Some plans are written to set the HFSA limit at whatever the indexed amount is, in which case no plan amendment will be needed (and the employer will need to allow elections of $2,550). If the plan states that the limit is a flat $2,500, a plan amendment will be needed before the start of the 2015 plan year if the employer wishes to increase the HFSA maximum contribution. Employers that have completed open enrollment, but who want to allow the increased contribution limit, may allow an amended election. Under IRS rules the amended election may be accepted up to the first day of the 2015 plan year, although for administrative reasons employers may wish to use a deadline prior to that date.
