IRS Announces Pre-Tax Contribution Limits for 2021
by Vita, on October 28, 2020
The Internal Revenue Service recently announced annual inflation adjustments for 2021. IRS Rev. Proc. 2020-45 provides that for taxable years beginning in 2021, the following maximums apply for Health Flexible Spending Arrangements, Adoption Assistance Programs, and Commuter Benefits:
Health FSA Limit: The annual Health FSA limit will stay the same at $2,750 in 2020 and $2,750 in 2021. The Health FSA rollover amount for 2021 will be $550 (this is 20% of the regular election maximum).
Adoption Assistance Limit: The annual Adoption Assistance limit will increase from $14,300 in 2020 to $14,400 in 2021.
Commuter Benefits Limits: The monthly transit and parking limits will both remain the same at $270 in 2020 and $270 in 2021.
If you are a Vita Flex FSA Client who currently offers the IRS maximum and your plan renews January 1, 2021, your limits have been automatically increased for the 2021 plan year, unless you have previously requested otherwise. Any participant that has already made an election at the previous maximum will be contacted in order to confirm their desired election amount.
If you are a Vita Flex Commuter Benefits Client, the monthly pre-tax limit will be automatically increased to the IRS maximum for the January benefit month.