HIGHLIGHTS
- The IRS recently announce cost-of-living adjustments to the annual dollar limits for employee benefit plans.
- Many of these limits will increase for 2018.
- In 2018, employees may contribute more money to their HSAs, health FSAs and 401(k) accounts.
OVERVIEW
Many employee benefits are subject to annual dollar limits that are periodically increased for inflation. The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the annual dollar limits for various welfare and retirement plan limits for 2018. Although some of the limits will remain the same, many of the limits will increase for 2018.
The annual limits for the following commonly offered employee benefits will increase for 2018:
- High deductible health plans (HDHPs) and health savings accounts (HSAs);
- Health flexible spending accounts (FSAs);
- Transportation fringe benefit plans; and
- 401(k) plans.
ACTION STEPS
Employers should update their benefit plan designs for the new limits and also make sure that their plan administration will be consistent with the new limits in 2018. Employers may also want to communicate the new benefit plan limits to employees in connection with annual open enrollment.
RESOURCES
- IRS Revenue Procedure 2017-37 (HSA/HDHP limits for 2018)
- IRS Revenue Procedure 2017-58 (health FSA, adoption assistance and transportation plan limits for 2018)
- IRS Notice 2017-64 (retirement plan limits for 2018)
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