The IRS recently issued Notice 2012-40 providing guidance on the $2,500 maximum annual limit on employee contributions to health care flexible spending accounts (“FSAs”) as set forth in the Affordable Care Act. The full text of the Notice can be found here.
The Act states that the limit is effective January 1, 2013 for any “taxable year.” The Notice clarifies that the $2,500 limit becomes effective for the first plan year for the employer’s cafeteria plan that begins on or after January 1, 2013. For calendar year cafeteria plans, the limit will be effective for the plan year beginning January 1, 2013. For fiscal year cafeteria plans, the limit will apply for the first plan year that begins in 2013. (more…)