2024 IRS Updates: HSA and FSA Contribution Limits Revealed!

Embracing the new year often brings about changes, and the IRS has set the tone by releasing the 2024 Health Savings Account (HSA) and Flexible Spending Account (FSA) contribution limits.

2024 HSA contribution limit is:

$4,150? for??Single

$8,300??for?Families?

2024 FSA contribution:

up to $3,200 through payroll deductions?

?? Demystifying HSA and FSA Contribution Limits

While contributing to HSA and FSA accounts offers a tax-efficient strategy, it's vital to stay within the defined limits to avoid penalties. The IRS has introduced a 7% increase in the contribution limits for 2024 compared to the previous year.

??? 2024 HSA and FSA Contribution Eligibility

1. Health Savings Account (HSA):

• Requirement: High Deductible Health Plan (HDHP)
• Open for individuals with an HDHP, providing a tax-advantaged space for healthcare savings.

2. Medical Flexible Spending Account (FSA):

• Compatibility: Non-HDHP Medical Plans
• Allows flexibility for medical expenses, not exclusive to HDHP plans.

3. Limited Flexible Spending Account (FSA):

• Usage: Dental and Vision Expenses
• You don't have to be on an HDHP plan to participate in FSA. However, if you do not use it all by the end of the year, you lose it.

?? Key Considerations for Contributions

• Business Owners' Rules: HSA and FSA accounts have distinct regulations for business owners, necessitating a deeper understanding.
• Exceeding Contributions: Any surplus contributions to HSA or FSA are subject to regular income tax, accompanied by a 6% tax on the excess amount.
• Correction Mechanism: In the event of exceeding contribution limits, corrective action is possible by withdrawing excess funds before the federal tax filing deadline. Interest earned is also considered in this process.

?? Strategic Insights for 2024 and Beyond

As we embrace the evolving landscape of HSA and FSA contributions, business owners and individuals alike are encouraged to explore the nuances of these tax-advantaged accounts.

Remember, a thoughtful approach to contributions ensures compliance and maximizes the benefits of these tax-saving tools. The 2024 contribution limits present an opportunity for strategic financial planning.

As a trusted PEO broker, we're here to empower you with strategic insights and support. Whether you're a business owner or an individual, our expertise extends to helping you make informed decisions about tax-advantaged accounts.

By partnering with us, you gain access to tailored PEO solutions that streamline HR, compliance, and benefits management.

Let's collaborate to ensure you not only stay within contribution limits but also maximize the benefits of these tax-saving tools.

Connect with us for a free consultation here and let's make the most of the tax-saving opportunities together! ????

Your PEO Advocate,

Suzanna Martinez

[email protected]

#PEOBroker #TaxSavings #FinancialPlanning