Hot Topics Blog
Thursday, November 11 2021
The Internal Revenue Service (IRS) finally announced the official 2022 Flexible Spending Account (FSA), commuter, and adoption limits. Here are the newly released contribution limits:
NEW CONTRIBUTION LIMITS
YOUR FLEXIBLE SPENDING ACCOUNTS
The 2022 Dependent Care FSA contribution limits decreased from $10,500 in 2021 for families and $5,250 for married taxpayers filing separately. The 2021 Dependent Care FSA limits came in response to the COVID-19 pandemic as a temporary relief to working parents. Both healthcare FSAs and Dependent Care FSAs are versatile healthcare savings vehicles that allow individuals to receive tax benefits when they spend funds on eligible expenses.
Overall, there are four general types of FSAs to know about:
WHAT TO KNOW ABOUT ROLLOVER FUNDS
Employers can offer one of these options but not both, and neither option is required. To learn more contact us for more information.
DETAILS ON COMMUTER LIMITS
If this plan is offered by the Employer, a commuter account allows you to set aside pre-tax funds to pay for your commute to work. For 2022, if you were to use both transit and parking, you could set aside up to $6,720 annually. Assuming a 30% effective tax rate that means you could potentially reduce your tax liability by more than $2,000.
Monday, November 08 2021
401(k) Contribution Limit Increased to $20,500
The Internal Revenue Service (IRS) has released Notice 2021-61, which contains cost-of-living adjustments for 2022 that affect amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs). The employee contribution limit for 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020.
Other key limit increases include the following:
The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans is increased to $14,000, up from $13,500.
Key limits that remain unchanged include the employee contribution limit for IRAs (remaining at $6,000) and the catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan (remaining at $6,500).