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IRS Announces 2020 Qualified Retirement Plan Limits

The IRS recently announced the inflation-adjusted limits for 2020 for tax qualified retirement plans. Below is a list of some of the key annual limits that will apply in 2020: • Compensation limit used in calculating a participant’s benefit accruals: increased to $285,000. • Elective deferrals to 401(k) and 403(b) plans: increased to $19,500. • Annual additions to a defined contribution plan: increased to $57,000. • Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: increased to $6,500. • Annual benefit limit for a defined benefit plan: increased to $230,000. • Compensation dollar limit for defining a “key employee” in a top heavy plan: increased to $185,000. • Compensation dollar limit for defining a “highly compensated employee”: increased to $130,000. The complete list of 2020 plan limits is available in Notice 2019-59 here.

IRS Announces Certain 2020 Health and Welfare Plan Limits

The IRS recently announced the following inflation-adjusted limits for 2020 for certain health and welfare plans: • Health flexible spending account limit: increased to $2,750. • Qualified transportation fringe benefit limits for parking and transit: each increased to $270. • Adoption assistance program limit: increased to $14,300. • Qualified Small Employer Health Reimbursement Arrangement limit: increased to $5,250 for individual coverage and $10,600 for family coverage. These, and certain other, 2020 plan limits are available in Notice 2019-44 here.

Puerto Rico Treasury Announces Qualified Retirement Plan Limits for 2019

The Puerto Rico Department of the Treasury recently issued Circular Letter Internal Revenue No. 18-21 (the “Circular”), which announced applicable qualified retirement plan limits for 2019, as required by the Puerto Rico Internal Revenue Code of 2011, as amended (the “PR Code”). For plans qualified only in Puerto Rico, the limits on elective deferrals, catch-up contributions, and after-tax contributions all remain unchanged for 2019, while the limits on annual benefits, annual contributions, plan compensation, and the highly compensated employee threshold all increased for 2019. For plans qualified in both Puerto Rico and the U.S. (including the Federal Government Thrift Plan), the limits on catch-up and after-tax contributions remain unchanged for 2019, while the limits on elective deferrals, annual benefits, annual contributions, plan compensation, and the highly-compensated employee threshold, all increased for 2019. The applicable plan limits are as follows: Annual Benefit Limit (All Defined Benefit Plans): $225,000 (increased from $220,000)… Continue Reading

IRS Announces 2019 Qualified Retirement Plan Limits

The IRS recently announced cost-of-living adjustments for 2019. Below is a list of some of the key annual limits that will apply to qualified retirement plans in 2019: Compensation limit used in calculating a participant’s benefit accruals: increased to $280,000. Elective deferrals to 401(k) and 403(b) plans: increased to $19,000. Annual additions to a defined contribution plan: increased to $56,000. Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: remains unchanged at $6,000. Annual benefit limit for a defined benefit plan: increased to $225,000. Compensation dollar limit for defining a “key employee” in a top heavy plan: increased to $180,000. Compensation dollar limit for defining a “highly compensated employee”: increased to $125,000. View the full list of 2019 plan limits in Notice 2018-83.

Fringe and Welfare Benefit Limit Increases for 2018

On October 19, 2017, the IRS released Revenue Procedure 2017-58, which increases the 2018 limits for certain fringe and welfare benefits as follows: Health Care Flexible Spending Accounts: The maximum amount an employee may contribute toward a healthcare flexible spending account through salary reduction is $2,650. Qualified Transportation Benefits: The monthly limits for qualified parking expenses and commuter highway expenses/transit passes are $260. The limit for qualified bicycle commuting reimbursements is unchanged ($20 per month). Adoption Assistance Programs: The maximum amount that can be excluded from an employee’s gross income for qualified adoption expenses provided through an adoption assistance program is $13,840. This limit phases out for taxpayers whose modified adjusted gross income is over certain limits. Qualified Small Employer Health Reimbursement Arrangement (“QSEHRA”): The reimbursement limit for a QSEHRA is $5,050 for individual coverage and $10,250 for family coverage. QSEHRAs are limited to small employers with fewer than 50… Continue Reading

IRS Releases 2018 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Revenue Procedure 2017-37, which sets the 2018 calendar year limits on (i) annual contributions that can be made to a health savings account (“HSA”) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2018 limits, which were increased across the board from the 2017 limits, are as follows: Minimum HDHP deductibles – $1,350 self-only coverage ($50 increase from 2017); $2,700 family coverage ($100 increase from 2017). HDHP out-of-pocket maximum limits – $6,650 self-only coverage ($100 increase from 2017); $13,300 family coverage ($200 increase from 2017). Annual HSA contribution limits – $3,450 self-only coverage ($50 increase from 2017); $6,900 family coverage ($150 increase from 2017). View Revenue Procedure 2017-37.

Puerto Rico Treasury Announces Qualified Retirement Plan Limits for 2017

The Puerto Rico Department of the Treasury recently issued Tax Policy Circular Letter No. 16-07 (the “Circular“), which announced applicable qualified retirement plan limits for 2017, as required by the Puerto Rico Internal Revenue Code of 2011 (the “PR Code“). For plans qualified in Puerto Rico and for those plans dual qualified in the United States and Puerto Rico, only the limits on annual benefits, annual contributions, and plan compensation have changed for 2017. The applicable plan limits are as follows: Annual Benefit Limit (All Defined Benefit Plans): $215,000 (increased from $210,000 for 2016). Annual Contribution Limit (All Defined Contribution Plans): $54,000 (increased from $53,000 for 2016). Annual Compensation Limit (All Plans): $270,000 (increased from $265,000 for 2016). Compensation Limit for a Highly Compensated Employee: $120,000 (unchanged). Elective Deferrals Limit (Dual Qualified Plans or Federal Government Thrift Plans): $18,000 (unchanged). Elective Deferrals Limit (Puerto Rico-Only Plans): $15,000 (unchanged). Catch-up Contribution… Continue Reading

IRS Announces 2016 Qualified Retirement Plan Limits

The IRS recently announced cost-of-living adjustments for 2016, which leave many key plan limits unchanged. The following is a list of some key annual limits that will apply to qualified retirement plans in 2016: Elective deferrals to 401(k) and 403(b) plans: $18,000. Annual additions to a defined contribution plan: $53,000. Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: $6,000. Annual benefit limit for a defined benefit plan: $210,000. Compensation dollar limit for defining a “key employee” in a top heavy plan: $170,000. Compensation dollar limit for defining a “highly compensated employee”: $120,000. Compensation limit in calculating a participant’s benefit accruals: $265,000. The full list of 2016 plan limits can be found in IRS Information Release 2015-118 here.

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