On November 6, 2019, the IRS released the 2020 cost of living adjustments for tax-related limits on salary reductions for a variety of benefits. These adjustments apply to the 2020 tax year and are summarized in the table below.
|Benefit||2019 Limit||2020 Limit|
|Qualified Transportation Fringe Benefit||$265/month||$270/month (increased by $5)|
|Adoption Credit||$14,080||$14,300 (increased by $220)|
|Health care Flexible Spending Accounts (FSA)||$2,700||$2,750 (increased by $50)|
|Transit Passes and Vanpooling||$265||$270 (increased by $5)|
The IRS has not yet announced an adjustment to the Dependent Care Assistance Program (DCAP) limit, which has remained at $5,000 ($2,500 for married couples filing separate tax returns) since 2014.
To whom does this apply?
These cost of living adjustments apply to employers who offer FSAs, transportation, and adoption benefits.
What steps must employers take to comply?
Increasing the dollar limits to match the increased maximums is optional.
This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.