IRS 2021 FSA contribution limits
The IRS announced an increase to flexible spending account (FSA) contribution limits for 2021.
Date Posted: January 26, 2021
On October 27, 2020, the IRS announced the FSA limits for 2021:
- Limits remain unchanged at $2,750 when you make pre-tax contributions to a health FSA account.
- The carryover amount of unused health FSA funds is increased to $550 (up $50 from the 2020 limit of $500) for 2021.
- Dependent care FSA limits remain unchanged at $5,000 a year for individuals or married couples filing jointly, or $2,500 for a married person filing separately.
- For 2021, the maximum amount of an employer subsidy for qualified child-adoption expenses that can be excluded from an employee's gross income is increased to $14,400, up from $14,300 in 2020.
Additionally, the guidance also addresses qualified transportation benefits. They remain unchanged at $270 for the 2021 tax year for qualified parking expenses.
Self-directed mutual fund investment options are made available through the services of an independent investment advisor, or your plan sponsor. Discretionary advisory services are provided by Betterment LLC, an SEC-registered investment adviser, with associated brokerage transactions provided by Betterment Securities, Member FINRA/SIPC. For details and disclosures visit betterment.com. The Schwab Health Savings Brokerage Account is offered to certain account holders through Charles Schwab & Co., Inc., Member FINRA/SIPC. For details and disclosures, visit schwab.com. Brokerage services are offered to certain accountholders through TD Ameritrade, Inc., Member FDIC/SIPC and a subsidiary of The Charles Schwab Corporation. For details and disclosures, visit tdameritrade.com.
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Health savings accounts (HSAs) are individual accounts offered through Optum Bank®, Member FDIC, or ConnectYourCare, LLC, an IRS-Designated Non-Bank Custodian of HSAs, each a subsidiary of Optum Financial, Inc. Neither Optum Financial, Inc. nor ConnectYourCare, LLC is a bank or an FDIC insured institution. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account.
Flexible spending accounts (FSAs), dependent care assistance programs (DCAPs), health reimbursement arrangements (HRAs), Commuter and Parking Benefits, Tuition Assistance Plans, Adoption Assistance Plans, Surrogacy Assistance Plans, Wellness Benefits, and Lifestyle Accounts (collectively, “Employer-Sponsored Plans”) are administered on behalf of your plan sponsor by Optum Financial, Inc. or ConnectYourCare, LLC (collectively, "Optum Financial") and are subject to eligibility and restrictions. Employer-Sponsored Plans are not individually owned and amounts available under the Employer-Sponsored Plan are not FDIC insured. This communication is not intended as legal or tax advice. Federal and state laws and regulations are subject to change. Please contact a legal or tax professional for advice on eligibility, tax treatment, and restrictions. Please contact your plan administrator with questions about enrollment or plan restrictions.
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