Many employee benefits are subject to annual dollar limits that are adjusted for inflation by the IRS each year. The following commonly offered employee benefits are subject to these limits:
- High deductible health plans (HDHPs) and health savings accounts (HSAs);
- Health flexible spending accounts (FSAs);
- 401(k) plans; and
- Transportation fringe benefit plans.
The IRS typically announces the dollar limits that will apply for the next calendar year before the beginning of that year. This gives employers time to update their plan designs and make sure their plan administration is consistent with the new limits.
Increased Limits
- HSA contributions
- HDHP limits for minimum deductibles and out-of-pocket maximums
- Health FSA pre-tax contribution limit
- Health FSA carryover limit
- Monthly limits for transportation fringe benefit plans
- Employees’ elective deferrals to 401(k) plans, pre-tax and Roth
- Tax exclusion for adoption assistance benefits
Unchanged Limits
The following limits stay the same from year to year because they are not indexed for inflation:
- Tax exclusion for dependent care FSA benefits
- Catch-up contributions to an HSA
Below is a chart of the inflation-adjusted limits for 2024. It also includes the 2023 limits for comparison purposes. Most of these limits will increase for 2024. Note that there are some benefit limits that are not indexed for inflation, such as the dependent care FSA limit and the catchup contribution limit for HSAs.
Links & Resources
- DOWNLOAD: Employee Benefit Plan Limits for 2024
- IRS Revenue Procedure 2023-23: 2024 limits for HSAs and HDHPs
- IRS Notice 2023-75: 2024 limits for retirement plans
- IRS Revenue Procedure 2023-34: 2024 limits for health FSAs, adoption assistance, and transportation fringe benefits
This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2023 Zywave, Inc. All rights reserved.
