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DISCLAIMER: This blog is published for general information only - it is not intended to constitute legal advice and cannot be relied upon by any person as legal advice.  U.S. Treasury Regulations require us to notify you that any tax-related material in this blog (including links and attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties, and may not be referred to in any marketing or promotional materials.  While we welcome you to contact our authors, the submission of a comment or question does not create an attorney-client relationship between the Firm and you. 

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Thursday
Mar152018

IRS Reduces 2018 HSA Family Contribution Limit

UPDATE: On April 26, 2018, the IRS reversed course and restored the limit on deductible contributions to health savings accounts (HSAs) for individuals with family coverage under a high deductible health plan to $6,900, the original amount announced last fall.  According to the IRS, individuals who received an excess contribution distribution based on the $6,850 limit announced earlier this year may either treat the distribution as based on mistake of fact and restore the contribution, or may keep the distribution free from penalty taxes as a distribution of an excess contribution.

 

The IRS has lowered the dollar limit on deductible contributions to health savings accounts (HSAs) for individuals with family coverage under a high deductible health plan.  The new limit for 2018 is $6,850, down from the $6,900 limit announced last fall.

Rev. Proc. 2018-18, issued on March 5, 2018, adjusted the limit to account for changes resulting from the tax reform bill passed in December.  The limit for individuals with self-only coverage remains $3,450.  There is no change to deductible and out-of-pocket expense limits for a plan to qualify as an HDHP.

Employers who have already contributed the maximum amount to employees’ HSAs for 2018 based on the higher limit should correct the contribution as necessary, and employers offering HDHPs may wish to notify employees that may be affected by the change.

Rev. Proc. 2018-18 announces inflation adjustments and modifies a variety of tax-related limitations, including limits on excludable amounts under adoption assistance programs.  The limit for benefits that may be excluded from income under an adoption assistance program is now $13,810, down from $13,840 as previously announced.  The income phase-out for this exclusion now begins at $207,140 and fully phases out at $247,140, down from $207,580 and $247,580.

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