Wednesday, December 18, 2013

IRS Releases 2014 Limits for Welfare Benefit Plans

The IRS has released the 2014 inflation-adjusted maximums for certain employee welfare benefit plans and the dollar amounts used for certain discrimination tests. 

For the definition of "highly compensated employee", which is used in several welfare plan discrimination tests, the threshold remains at $115,000 when determinations are based on compensation from the preceding year.

For adoption assistance plans, because of a change in the law, the maximum amount that can be excluded from an employee's gross income for adoption expenses has increased to $13,190 (a $220 increase from 2013).

Eligible long-term care premiums that are treated as medical care expenses cannot exceed: $370 for individuals age 40 or less; $700 for ages 41 to 50; $1,410 for ages 51 to 60; $3,720 for ages 61 to 70 and $4,660 for those over age 70.

The 2014 limit on contributions to health savings accounts ("HSAs") increases to $3,300 for a self-only HSA and $6,550 for a family HSA.  For 2014, a high deductible health plan ("HDHP") plan must have a minimum deductible of $1,250 for self-only coverage, and $2,500 for family coverage.  The maximum out-of-pocket amount for a HDHP (including deductibles, co-payments and other amounts, not including premiums) cannot exceed $6,350 for self-only coverage and $12,700 for a family.

Employees' pre-tax employee contributions to health care flexible spending account plans are limited to $2,500 per year as of the first day of the first plan year beginning on or after January 1, 2014.

In 2014, the monthly limit on non-taxable qualified parking expense reimbursements will increase to $250 (up $5 from 2013).  However, because of an expiring law, the monthly limit on non-taxable qualified transportation expense reimbursements will decrease to $130 (a $115 reduction from 2013).

The maximum tax-exempt benefit from a dependent care assistance plan remains at $5,000, as this amount is not indexed to inflation.