IRS to Allow Rollovers for Flex Spending Accounts in 2014

A pleasant surprise is in store for flexible spending account participants in 2014. 

The IRS surprised employers a few weeks back with a rule change that allows flexible spending account participants to roll over up to $500 of their unused account balances into the next year. The change even allows the rollover of 2013 balances, meaning that flexible spending accounts are no longer a strictly use-it-or-lose-it proposition. Companies that provide HSAs for their employees will need to change their plan descriptions in order to take advantage of the new carryover rules. 

Other rate changes are more pedestrian; mostly incremental increases in limits. Here's a rundown of the changes in the most commonly used rates and limits.

2014 Rates

  2013 2014
Social Security $113,700 $117,000
 

FICA:
6.2% $7049.40

FICA:
6.2% $7254.00

 

Medicare:
1.45% $200,000
2.35% > $200,000

Medicare:
1.45% $200,000
2.35% > $200,000

Domestic worker threshold $1,800 $1,900
Elections workers $1,600 $1,600
Transit passes, van pool, bike $245/$245/new $130/$130/$20
Parking $245 $250
415(b)(1)(A) defined benefit max $205,000 $210,000
Max contribution $51,000 $52,000
Education assistance $5,250 $5,250
Limitations    
 - 401(k) $17,500 $17,500
 - 403(b) $17,500 $17,500
 - 408(p) $12,000 $12,000
414(v) catch-up $5,500 $5,500
414(v) catch-up simple $2,500 $2,500
IRA $5,500-6,500 > 50 $5,500-6,500 > 50
Limitations    
 - Highly Compensated 414 $115,000 $115,000
Annual compensation limits    
 - 401 gvt plans in effect 7/1/93 $380,000 $385,000
HSA    
Annual deduction limit single/family $1,250/$2,500 $1,250/$2,500
Maximum out-of-pocket single/family $6,250/$12,500 $6,350/$12,700
Maximum annual contribution single/family $3,250/$6,450 $3,300/$6,550
Maximum annual catch-up (55) $1,000 $1,000
Foreign Income Exclusion $97,600 $99,200
Minimum annual comp 408 $550 $550
Adoption Exclusion limits $12,970 $13,190
 - Phase out AGI $194,580 $197,880
 - Total exclusion AGI $234,580 $237,880
Definition of Control Employee $100,000 $105,000
 - Corp officer $100,000 $105,000
 - Earnings test $205,000 $210,000
Definition of Highly Comp.
Key Employee Top Heave Plan
$115,000
$165,000
$115,000
$170,000
Long-term premiums    
 - < 40 $350 $370
 - 40-50
 - 50-60
$680
$1,360
$700
$1,400
 - 60-70 $3,640 $3,720
 - > 70 $4,550 $4,660

Foreign Income Exclusions

Maximum Foreign Earned Income Exclusion Housing Limit Base Housing Max Foreign Cost Exclusion
2012 $95,100 $28,530 $15,216 $13,314
2013 $97,600 $29,280 $15,616 $13,664
2014 $99,200 $29,760 $15,872 $13,888

State Unemployment Insurance wage base changes. Only states with changes for 2014 are shown.

State 2013 2014
Alaska $36,900 $38,000
Colorado $11,300 $11,700
Delaware $10,500 $18,500
Hawaii $39,600 $40,400
Idaho $34,800 $35,500
Illinois $12,900 $12,960
Kentucky $9,300 $9,600
Montana $27,900 $29,000
Nevada $26,900 $27,400
New York $8,500 $10,300
New Jersey $30,900 $38,000
Oklahoma $20,100 $31,500
Pennsylvania $8,500 $8,750
Rhode Island $20,200/$21,700 $20,600/$22,100
South Dakota $13,000 $14,000
Utah $30,300 $31,100
Washington $39,800 $41,300
Wyoming $23,800 $24,600

State minimum wage changes. Only states with changes for 2014 are shown. All are effective 1/1/2014 except as noted.

State 2013 2014
California $8.00 $9.00 (effective 7/1/2014)
Colorado $7.78 $8.00 (proposed)
Connecticut $8.25 $8.70
Florida $7.79 $7.93
Montana $7.80 $7.90
New Jersey $7.25 $8.25
New York $7.25 $8.00
Ohio $7.85 $7.95
Oregon $8.95 $9.10
Rhode Island $7.75 $8.00
Vermont $8.60 $8.73
Washington $9.19 $9.32
SeaTac $15.00 (tentative)

All numbers are current as of Nov 18, 2013 and subject to additions and changes.

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James Paille, CPP, is the Director of Operations for Thomson Reuters' myPay Solutions. He has been an executive manager in the payroll service industry for over 30 years, specializing in managing multi-location offices. He is a member of the APA's Board of Directors and National Speakers Bureau, and chairs the CPP Certification Review Panel. He holds a BS in Accounting from St. John Fisher College in Rochester, NY.

 

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