IRS Announces New Health FSA Limits for 2017

On Wednesday, October 26, 2016, the Internal Revenue Service (IRS) released Revenue Procedure 2016-55, which officially raised the maximum Health Flexible Spending Account (FSA) contribution limit to $2,600 per calendar year beginning in 2017.   The Health FSA contribution limit is the only limit that was increased for the coming year.

This means that starting January 1, 2017, the contribution limits for FSAs are:

Type

2016

2017

Health $2,550 $2,600
Dependent Care $5,000 $5,000
Transportation (Parking) $255/month $255/month
Transportation (Transit) $255/month $255/month


Key Takeaway:

The increase goes into effect on January 1, but it is important to remember that organizations are not required to raise the contribution limit.  Organizations with January 1 renewal dates, who want to raise the limit, should contact your M3 Account Team or the administrator of their Flexible Spending Account plan to determine how to move forward.  There may still be time to increase the maximum contribution to your plan to adjust for the new legal threshold.

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