IRS Restores Maximum Family HSA Contribution to $6,900

Responding to concerns about administrative headaches for plan sponsors and administrators, the Internal Revenue Service (IRS) reversed its previous decision to lower the maximum family health savings account (HSA) contribution from $6,900 to $6,850.

HSA

utah778 / iStock / Getty Images Plus

“For 2018, taxpayers may treat $6,900 as the annual limitation on the deduction for an individual with family coverage” under a high-deductible health plan (HDHP), the IRS stated in Revenue Procedure (. Proc.) 2018-27, issued April 26.

The limit was originally set at $6,900, but the Tax Cuts and Jobs Act changed the method for calculating annual inflation adjustments. So in March, the IRS issued Rev. Proc. 2018-18 lowering the limit, along with some other employee benefits thresholds, to $6,850.

“In response to Rev. Proc. 2018-18, stakeholders informed the Treasury Department and the IRS that the $50 reduction to the limitation on deductions for individuals with family coverage would impose numerous unanticipated administrative and financial burdens,” the IRS stated in Rev. Proc. 2018-27. Many individuals with family HDHP coverage already had made the maximum annual contribution, and others made cafeteria plan elections based on that limit.

Stakeholders also warned “that the costs of modifying the various systems to reflect the reduced maximum, as well as the costs associated with distributing a $50 excess contribution (and earnings), would be significantly greater than any tax benefit associated with an unreduced HSA contribution,” the IRS added.

“In response to these concerns, the Treasury Department and the IRS have determined that it is in the best interest of sound and efficient tax administration to allow taxpayers to treat the $6,900 annual limitation originally published in Rev. Proc. 2017-37 as the 2018 inflation adjusted limitation on HSA contributions for eligible individuals with family coverage under an HDHP,” the IRS concluded.

Rev. Proc. 2018-27 also details the options for individuals and employers in cases where an excess contribution was already returned to the individual based on the lower limit.

The post IRS Restores Maximum Family HSA Contribution to $6,900 appeared first on HR Daily Advisor.

[ad_2]

You might also like More from author

Leave A Reply

Your email address will not be published.