November 7, 2022

Employee benefit plan limits for 2023

Dereck Mattson joined Christensen Group in 2017. Previously, Dereck held the position of Producer in the Senior Living Division of a prominent insurance company. Dereck has a specific focus in the following industries: Dereck graduated from the University of North Dakota with a Bachelor of Business Administration, Management. He holds an Associate in General Insurance (AINS) designation. Dereck is involved with several state associations including; LeadingAge Minnesota, Care Providers of Minnesota, and the Wisconsin Assisted Living Association (WALA).

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
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 in 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.

Increased Limits

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

Unchanged Limits

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