The IRS has announced welfare and retirement benefit plan limits for 2023. There are many sections in the Tax Code that limit the amount of tax-favored welfare and retirement benefits an employer may provide or an employee may receive. The IRS updates these limits annually to account for inflation. Since inflation has been at elevated levels in the last several months, some of the limit increases are record high.
Here (opens a new window) are the limits for 2023 and the corresponding limits for 2022. Note that regulators previously issued guidance updating the limits for health savings accounts and their corresponding high-deductible health plans, as well as certain health reform-related fees, penalties and limits. Those updates are included as well.
Lockton comment: As a reminder, the IRS and Congress provided employers various flexibilities in light of the COVID-19 pandemic, including allowing participants to carry over their entire remaining year-end balance for both health and dependent care flexible spending accounts from the plan year ending in 2021 to the following plan year. This flexibility does not apply for taxable years ending in 2022. If the cafeteria plan permits the carryover of unused amounts of health FSAs, the new maximum carryover amount for taxable years ending in 2022 is $610.
Click here (opens a new window) for a printable version of the 2023 retirement and welfare benefit plan limits.
Full alert (opens a new window)Not legal advice: Nothing in this update should be construed as legal advice. Lockton may not be considered your legal counsel and communications with Lockton Companies are not privileged under the attorney-client privilege.
The communication is offered solely for discussion purposes. Lockton does not provide legal or tax advice. The services referenced are not a comprehensive list of all necessary components for consideration. You are encouraged to seek qualified legal and tax counsel to assist in considering all the unique facts and circumstances. Additionally, this communication is not intended to constitute U.S. federal tax advice, and is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending any transaction or matter addressed herein to another party.
This document contains the proprietary work product of Lockton Companies and is provided on a confidential basis. Any reproduction, disclosure, or distribution to any third party without first securing written permission is expressly prohibited.
