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HB Counsel Client Alert – Effective Immediately: IRS Relief from Decrease in Maximum Annual HSA Contribution


In a previous alert we notified you the IRS modified the 2018 cost-of-living adjustments for Health Savings Accounts (“HSAs”) on March 5, 2018 due to the “Tax Cuts and Jobs Act” (the “Act”).  The Act modified the calculations the IRS uses to set specific annual dollar limits, including those for contributions to HSAs.

The IRS published Revenue Procedure 2018-18 on March 5, 2018, which required an immediate $50 decrease to the family HSA plan maximum annual contribution for 2018.

Individuals and employers who contribute to HSAs, and are funding or pre-funded the full family amount of $6,900, were advised to make modifications to comply with the newly adjusted $6,850 family contribution limit.

 

On April 26, 2018, in response to numerous requests for relief from stakeholders, the IRS published Revenue Procedure 2018-27 which provides that for 2018, taxpayers may treat $6,900 (rather than $6,850) as the maximum annual family HSA contribution limitation.

 

Next Steps

Revenue Procedure 2018-27 provided guidance on how to handle distributions from an HSA that were completed as a correction to reduce a contribution of $6,900 to the $6,850 contribution amount, previously announced in Rev. Proc. 2018-18.

An individual who has received a corrective distribution may (but is not required to) repay the contribution to the HSA up to the $6,900 amount.

The content herein is provided for educational and informational purposes only and does not contain tax or legal advice.  Please contact our office if you have any questions about the impact of this IRS HSA contribution change on your employee benefit plans.

Dated:  April 30, 2018

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