IRS Announces 2014 Pension Plan Limitations

The Internal Revenue Service announced on Thursday cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2014. Some limits will remain unchanged in 2014 because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014. Highlights include:

• Elective Deferral. The elective deferral limit for employees who participate in 401(k), 403(b) and most 457 plans remains unchanged at $17,500.

• Catch-Up. The catch-up contribution limit for employees age 50 and over who participate in 401(k), 403(b) and governmental 457 plans remains unchanged at $5,500.

• Annual Defined Contribution Limit. The limitation for defined contribution plans increased from $51,000 to $52,000

• Annual Compensation Limit. The compensation limit increased from $255,000 to $260,000

• HCEs. The threshold for identifying highly compensated employees is $115,000, the same as in 2013.

• Key Employees. The threshold for identifying key employees for purposes of top-heavy testing increased from $165,000 to $170,000.

• Wage Base. The Social Security taxable wage base is $117,000 in 2014, up from $113,700 this year. (The wage base is determined by the Social Security Administration, not the IRS.)

If additional questions arise, please contact your senior consultant at BPC. Additional charts and resources can be found here.

Posted on November 5, 2013 .

New FSA Policy Allows for Rollover Up to $500

Good news from Washington, D.C.! Today the Department of Treasury issued a press release and informational fact sheet announcing a major policy change relating to Flexible Spending Accounts (FSAs) that has many positive implications for all FSA constituents - including employers and participants. The Department of Treasury has modified its FSA "use-it-or-lose-it" provision to allow a limited rollover of FSA funds. 

Details are as follows:

Effective in plan year 2014, employers that offer FSA programs will have the option of allowing participants to roll over up to $500 of unused funds at the end of the plan year.
Effective immediately (in 2013), employers that offer FSA programs that do not include a grace period will have the option of allowing employees to roll over up to $500 of unused funds at the end of the current 2013 plan year.

For the past several years, BPC has been deeply involved in leading industry efforts to educate and convince Federal policymakers to adopt this major new feature for FSAs. BPC is thrilled that these efforts have borne fruit - and believe that this is fantastic news for all FSA stakeholders.

From our perspective, the major benefits of this new "rollover" provision include:

  • Eliminating the most significant impediment to FSA adoption (use-it-or-lose-it) - creating significant upside for FSA adoption growth, which has been limited over the past several years
  • Enhancing healthcare options and offering greater funds protection for FSA participants, particularly lower & middle income workers who are highly concerned about cash flow
  • Minimizing risk for constituents with unpredictable healthcare expenses, such as those dealing with chronic conditions that may necessitate high-cost procedures/services with ambiguous timing or medical necessity
  • Curbing wasteful & potentially unnecessary end-of- year spending by FSA participants seeking to avoid losing unused funds

Since this was issued today, we are combing through the guidance and more details will follow. You can read the guidance in full here.

Posted on October 31, 2013 .

Important Announcement Regarding Affordable Care Act PCORI Fees

BPC is here to help you understand the regulatory and compliance aspects of Affordable Care Act (ACA) as it relates to your BPC Benefits plans. The enactment of ACA created the Patient-Centered Outcomes Research Institute or PCORI to support clinical effectiveness research and is funded in part by fees paid by health insurance carriers and health plan sponsors. Health care reform imposes PCORI fees on certain health insurers and self-insured health plan sponsors for policy or plan years ending on or after October 1, 2012 and before October 1, 2019.   Only employers whose plan year ended on or between October 1, 2012, and December 31, 2012, are required to report and make a payment by July 31, 2013.

Here are some frequently asked questions regarding Patient-Centered Outcomes Reach Institute (PCORI) fees:

Posted on July 2, 2013 .

IRS Releases New 2014 HSA and HDHP limits

The IRS has released the 2014 cost-of-living adjustments affecting HSAs and HDHPs. Only the HSA contribution limits and the HDHP out-of-pocket maximums will increase for 2014. The HDHP minimum required deductibles will be unchanged. Here are the details:

  • HSA Contribution Limits. The 2014 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,300 (a $50 increase from 2013), and the limit for individuals with family HDHP coverage is $6,550 (a $100 increase from 2013). 
  • HDHP Minimum Required Deductibles. The 2014 minimum annual deductible for self-only HDHP coverage is $1,250 and the minimum annual deductible for family HDHP coverage is $2,500. Both are unchanged from 2013. 
  • HDHP Out-of-Pocket Maximums. The 2014 maximum limit on out-of-pocket expenses (including items such as deductibles, co-payments, and co-insurance, but not premiums) for self-only HDHP coverage is $6,350 (a $100 increase from 2013), and the limit for family HDHP coverage is $12,700 (a $200 increase from 2013).
Posted on May 6, 2013 .