The FSA Contribution Limit Will Rise To $3,050 In 2023
Every worker in the U.S. has the chance to put more money into their health care flexible spending account (FSA).
The Internal Revenue Service has indicated that this will take place the next year, when they will be able to raise it to $3,050.
In 2022, the limit was set at $2,850. From 2021 to 2022, the increase was only $100, but it has now gone up by $200.
If the employer's plan lets you keep any health FSA money you don't use, the maximum goes up to $610, from $570.
Those will also go up because of the cost of living changes (COLAs). The IRS wrote about all of this in the Revenue Procedure 2022-38 and a press release that summarised it.
The IRS should announce early due to growing inflation. This gives firms more time to update open enrollment platforms and materials.
Plan sponsors must update payrolls and develop operating plans swiftly. It should also improve how they talk about open enrollment, helping them clarify their changes.
The IRS hasn't announced 401(k) and other defined contribution plan COLAs. No modifications to yearly restrictions for defined benefit pensions have been announced.
Last year, the maximum salary deferral contribution for health care flexible spending amounts was $2,850. This year, that amount went up to $3,050.