IRS releases 2020 contribution limits for FSAs and other popular perks New Maximum pretax amounts for payroll deductions In 2020, salary contribution limits are rising for several popular benefits that employers offer their workers. The IRS recently announced the cost-of-living adjustments to these limits in Revenue Procedure 2019-44. Getting up to speed For 2020, employees will be able to contribute more money to health flexible spending arrangements (FSAs). The maximum annual dollar limit for voluntary contributions to an FSA will be $2,750, which is a $50 increase from 2019. Payroll and benefits pros may have to scramble at the last minute to ensure this change is reflected in the benefits offered during open enrollment. New contribution limits were also announced for qualified transportation fringe benefits. Up to $270 a month can be excluded from a worker’s income for transit passes and commuter highway vehicle transportation (e.g., van pooling). The limit for qualified parking benefits will also be $270 a month. Both These figures are $5 higher than they were in 2019. Remember: Although these transportation benefits can still be excluded from an employee’s monthly income, employers can no longer take them as business deductions due to changes by the Tax Cuts and Jobs Act. For employers who offer workers adoption assistance, the maximum amount that can be excluded from a workers from a worker’s income to help cover the cost of adoption will be $14,300 in 2020 (an increase from $14,080 in 2019). Adoption expense that qualify must be “reasonable and necessary”, according to the IRS. Any costs associated with adopting a spouse’s child don’t qualify. Note: Special needs adoptions may qualify for the exclusion, even if the employee didn’t pay any qualified adoption costs. The annual income limit at which adoption benefits begin to phase out will be $214,520 for 2020, compared to $211,160 in 2019. Adoption benefits completely phase out once a worker makes $254,520 a year (up from 251,160 in 2019). More info: irs.gov/pub/irs-drop/rp-19-44.pdf