The Internal Revenue Service (IRS) recently announced 2022 increases to the health flexible spending account (FSA) contribution limit and the transportation fringe benefit limit. This alert complements our November 11, 2021 Alert, “2022 retirement and benefit plan limits explained in 5 short charts.”

This alert sets forth the updated flexible spending account and transportation fringe benefit limits for 2022, as compared to the 2021 limits, in the charts below. Also included below are the dependent care FSA limits for 2022.

Flexible spending account limit

2021

2022

Health FSA

$2,750

Max carry-over to following plan year $550

$2,850

Max carry-over to following planyear $570

Dependent care FSA*

Family: $10,500**

Married, Filing Separately $5,250

Family: $5,000**

Married, Filing Separately

$2,500

 

* Section 9632 of the American Rescue Plan Act of 2021, enacted on March 11, 2021, increased the exclusion for dependent care FSAs with respect to any taxable year beginning after December 31, 2020 and before January 1, 2022.

** Married and filing a joint return or single parent filing

Transit and parking fringe benefits limit 2021 2022

Transit/parking

$270/month

$280/month

Action items for employers

  • Update any plan documents that identify the annual limitations.
  • Update participant communications as the limits may impact important benefit elections for 2022.
  • Update Human Resource Information Systems (HRIS) and/or payroll systems with new limitations for administration, recordkeeping and tax reporting.
  • Ensure all vendor data feeds are updated to comply with the new limits.