Congress Makes Last Minute Updates to Pre-Tax Plans in 2015

Congress Makes Last Minute Updates to Pre-Tax Plans in 2015

December was a busy month for pre-tax plans. Many employers, participants, and admin2015 Updatesistrators made their voices heard in Washington, DC by reaching out to their representatives asking them to vote to make changes to the upcoming Cadillac Tax. The tax was originally scheduled to  take effect in 2018.  Congress passed, and the President signed, the Consolidated Appropriations Act, 2016, Pub. L. No. 114-113 which placed a 2 year delay on the effective date of the Cadillac Tax.  The tax will now be effective in 2020.

While the delay is a welcome update, the benefits that will be included in the calculation of the tax have not changed.  Flexible Spending Accounts, Health Reimbursement Arrangements, and Health Savings Accounts are all currently being considered as part of the provisions of the tax.  Many people are expected to continue to push to have the tax either completely repealed before its effective date, or remove these benefits from the calculation of the tax.

Employers offering Qualified Transportation Plans were also impacted by the changes made by Congress at the end of the year. Congress restored parity between transit and parking benefits for the amount that can be deducted and claimed pre-tax each month for each benefit.  In 2015, the monthly maximum for transit was retroactively increased to $250, the same as the monthly maximum for parking.  The monthly maximum for 2016 will be $255 per month for both transit and parking benefits.  The update to the limits for transit benefits to remain the same as parking benefits is permanent.

For more information on the Cadillac Tax or Qualified Transportation Plans, please visit our website at www.myCafeteriaPlan.com.

 

 

 

 

BusinessPlans, Inc. – myCafeteriaPlan does not intend to provide legal or tax advice and information contained in this article should not be interpreted as such. Regulations governing pretax plans are often open to interpretation and should be reviewed with your legal or tax advisor before making any decisions regarding your plan.

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