Deadline Fast Approaching to Amend FSA for $2,500 Limit
As you likely already know, the ACA put a limit into place for health FSA plans. For plan years beginning on or after January 1, 2013, a health FSA plan could no longer permit participants to make salary reduction contributions in excess of $2,500 per year. While this new rule has been the law since the beginning of 2013, in Notice 2012-40, the IRS gave plan sponsors until December 31, 2014 to amend their FSA plans to comply with this rule (as long as the plan was operating in accordance with the law in the interim).
The ACA also provided for this maximum amount to be increased for inflation. The IRS recently issued the 2015 adjusted maximum to $2,550. If you want to take advantage of this increased limit and you have already amended your plan, please review the terms of the plan to make sure that the amendment permits for an adjustment for inflation in later years. If not and if you wish to take advantage of this new maximum, your plan must be amended prior to the first day of the plan year in which you wish to use the increased maximum (i.e., by December 31, 2014 for calendar year plans that wish to use the increased maximum for 2015).