IRS

IRS Announces HSA Limits for 2020

On May 28, 2019, the Internal Revenue Service (IRS) released Revenue Procedure 2019-25 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2020. An HSA is a tax-exempt savings account that employees can use to pay for qualified health expenses.

To be eligible for an HSA, an employee:

  • Must be covered by a qualified high deductible health plan (HDHP);

  • Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);

  • Must not be enrolled in Medicare; and

  • May not be claimed as a dependent on someone else’s tax return.

The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:

  • 2020 HSA contribution limit:

    • Single: $3,550 (an increase of $50 from 2019)

    • Family: $7,100 (an increase of $100 from 2019)

    • Catch-up contributions for those age 55 and older remains at $1,000

  • 2020 HDHP minimum deductible (not applicable to preventive services):

    • Single: $1,400 (an increase of $50 from 2019)

    • Family: $2,800 (an increase of $100 from 2019)

  • 2020 HDHP maximum out-of-pocket limit:

    • Single: $6,900 (an increase of $150 from 2019)

    • Family: $13,800* (an increase of $300 from 2019)

*If the HDHP is a nongrandfathered plan, a per-person limit of $8,150 also will apply due to the Affordable Care Act’s cost-sharing provision for essential health benefits.

 

Originally posted on ThinkHR.com

IRS Announces 2019 Retirement Plan Contribution Limits | North Carolina Employee Benefits

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On November 1, 2018, the Internal Revenue Service (IRS) released Notice 2018-83announcing cost-of-living adjustments affecting dollar limits for pension plans and other retirement-related items for tax year 2019. Many pension plan limits will change next year because the increase in the cost-of-living index has met the statutory thresholds that trigger their adjustment. Other items, however, will remain the same. The following is a summary of the limits for 2019.

For 401(k), 403(b), and most 457 plans and the federal government’s Thrift Savings Plans:

  • The elective deferral (contribution) limit increases from $18,500 to $19,000 for 2019.

  • The catch-up contribution limit for employees aged 50 and over who participate in these plans remains at $6,000.

For individual retirement arrangements (IRAs):

  • The limit on annual contributions has not changed for many years. For 2019, however, it increases from $5,500 to $6,000.

  • The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment so it remains $1,000 for 2019.

For simplified employee pension (SEP) IRAs and individual/solo 401(k) plans:

  • Elective deferrals increase to $56,000 for 2019, based on an annual compensation limit of $280,000 (up from the 2018 amounts of $55,000 and $275,000).

  • The minimum compensation that may be required for participation in a SEP remains unchanged at $600 for 2019.

For savings incentive match plan for employees (SIMPLE) IRAs:

  • The contribution limit on SIMPLE IRA retirement accounts increases to $13,000 for 2019 (from $12,500 for 2018).

  • The SIMPLE catch-up limit remains unchanged at $3,000 for 2019.

For defined benefit plans:

  • The basic limitation on the annual benefits under a defined benefit plan is increased to $225,000 for 2019 (from $220,000 for 2018).

Other changes:

  • Highly-compensated and key employee thresholds:

    • The threshold for determining “highly compensated employees” increases to $125,000 for 2019 (from $120,000 for 2018).

    • The threshold for officers who are “key employees” in a top-heavy plan increases to $180,000 for 2019 (from $175,000 for 2018).

  • Social Security cost of living adjustment: In a separate announcement, the Social Security Administration stated that the taxable wage base will increase to $132,900 for 2019, an increase of $4,500 from the 2018 taxable wage base of $128,400. Thus, the maximum Social Security tax liability will increase for both employees and employers.

This article originally appeared on ThinkHR.com.