On Thursday, October 30th, for tax year 2015, the Internal Revenue Service announced new annual inflation adjustments for 2015, including the following:
Flexible Spending Accounts
The annual dollar limit on employee contributions to employer-sponsored health care FSAs rises to $2,550 in 2015, up from $2,500 in 2014. The annual limit for dependent care FSAs or dependent care assistance plans (DCAPs) will remain at $5,000 for qualifying individuals and those who are married and file a joint return, and will remain at $2,500 for those who are married and file separate returns.
REMINDER—Beginning in 2014 but expected to be more widely adopted in 2015, the U.S. Treasury Department and the IRS altered the long-standing “use it or lose it” rule, allowing employers to offer a carryover of up to $500 in unused health FSA funds to the following year or to continue a grace period option giving employees a two-and-a-half month extension to spend remaining FSA funds. FSAs cannot have both a carryover and a grace period option, and employers are not obligated to offer either extension.
The monthly limit for qualified transportation benefits are unchanged for 2015 ($130/month for transit passes and $250/month for qualified parking), assuming no year-end action by Congress. These are the applicable numbers for the tax year 2015 and are effective January 1, 2015 for Plan Years beginning in 2015.
Read the entire release here and IRS Revenue Procedure 2014-61 here.