Big news, but late for many plan sponsors of FSA plans. The IRS released guidance on May 30, 2012 regarding health reform’s $2,500 FSA salary reduction contribution limit. Regulators have announced that the $2,500 annual limit will apply on a PLAN YEAR BASIS as opposed to the tax year, or calendar year basis as originally required. This change will address confusion and will simplify administration for non-calendar year FSA plans. The $2,500 FSA salary reduction contribution limit will apply for FSA plan years beginning after December 31, 2012. Please refer to our HBI compliance update on HBIonline for more information about the plan year change and other clarification regarding health reform’s $2,500 FSA annual limit.
Additional Information Available at: http://www.irs.gov/pub/irs-drop/n-12-40.pdf
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