The changes just keep on coming! IRS shows no signs of slowing down as it cranks out new limits and thresholds for 2015.
The latest round comes courtesy of IRS Revenue Procedure 2014-61. And it gives you the limits for many popular benefits you and your peers offer employees these days.
Here are three updates you’ll need Jan. 1 … and one even before that. Take a look to make sure you’re ready.
Year-end update No. 1: New FSA limit
No waiting for the new year on this one — this first update is one Payroll and your company’s employees will want to know about ASAP:
IRS just announced that it’s raising the salary reduction limit for health flexible spending arrangements (FSAs).
The 2015 limit for FSA contributions will be $2,550. That’s a $50 increase over this year’s threshold.
So now you’ll need to alert employees they can sock away more for things like co-pays, over-the-counter medications and even certain brands of sunblock. That’s important info to have now as many folks are deciding how much to save for 2015.
But don’t forget that IRS recently imposed some other FSA limits on your company when it modified the use-it-or-lose-it rule. Now you can allow for either (but not both):
- a carryover of up to $500 of unused amounts at the end of the year (this doesn’t impact the salary reduction limit in the new year), or
- a grace period of up to two months and 15 days immediately following the end of the year.
And your company’s plan documents must reflect that.
Year-end update No. 2: Transportation fringe benefits limits
You and your finance staffers do catch a break on this next front, though employees likely won’t be too pleased about it.
IRS has just announced it will hold the qualified transportation fringe benefit limits steady for the new year. That means that on Jan. 1, the monthly exclusion amount will remain:
- $250 for qualified parking, and
- $130 for transportation in a commuter highway vehicle and any transit pass.
Remember, the temporary increase due to the American Taxpayer Relief Act has expired.
Year-end update No 3: Adoption assistance limits
If your company chooses to help employees foot the bill to adopt a child, you can offer them a little more in 2015 without having to treat it as income.
For adoption assistance, the maximum amount your company can exclude from an employee’s gross income for adoption expenses will be $13,400. That’s up from $13,190 in 2014.
Note: The same amount applies if an employee adopts a child who has special needs.
However, the same limits don’t apply to everyone, depending on how much folks make. The amount begins to phase out if the employee’s modified adjusted gross income exceeds $201,010 ($197,880 this year). The amount gets completely phased out at $241,010. Currently it’s at $237,880.
Info: IRS Revenue Procedure 2014-61, at www.irs.gov/pub/irs-drop/rp-14-61.pdf
