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Employee Benefit Plan Limits for 2023
Many employee benefits are subject to annual dollar limits that are adjusted for inflation by the IRS each year. The following commonly offered employee benefits are subject to these limits:
- High deductible health plans (HDHPs) and health savings accounts (HSAs);
- Health flexible spending accounts (FSAs);
- 401(k) plans; and
- Transportation fringe benefit plans.
The IRS typically announces the dollar limits that will apply for the next calendar year well before the beginning of that year. This gives employers time to update their plan designs and make sure their plan administration is consistent with the new limits.
This Compliance Overview includes a chart of the inflation-adjusted limits for 2023. Due to high rates of inflation, all of these limits will substantially increase for 2023. Note that there are some benefit limits that are not indexed for inflation, such as the dependent care FSA limit and the catch-up contribution limit for HSAs.
- HSA contributions
- HDHP limits for minimum deductibles and out-of-pocket maximums
- Health FSA pre-tax contribution limit
- Health FSA carryover limit
- Monthly limits for transportation fringe benefit plans
- Employees’ elective deferrals to 401(k) plans, pre-tax and Roth
- Tax exclusion for adoption assistance benefits
The following limits stay the same from year to year because they are not indexed for inflation:
- Tax exclusion for dependent care
- FSA benefits Catch-up contributions to an HSA
LINKS AND RESOURCES
- IRS Revenue Procedure 2022-24: 2023 limits for HSAs and HDHPs
- IRS Notice 2022-55: 2023 limits for retirement plans
- IRS Revenue Procedure 2022-33: 2023 limits for health FSAs, adoption assistance and transportation fringe benefits
*Limits that are not adjusted for inflation
This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2022 Zywave, Inc. All rights reserved.