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2021 FSA Contribution Cap Stays at $2,750

On October 27, the IRS announced the 2021 dollar limit for employee contributions to health flexible spending accounts (health FSAs). The 2021 limit will remain unchanged at $2,750. 

For health FSA plans that permit the carryover of unused amounts, the maximum carryover amount for 2021 is $550, which is a $50 increase from 2020, according to IRS Revenue Procedure 2020-45.

Next Steps for Employers

Employers should be mindful of the change to carryover limits and update open enrollment materials and communications to employees regarding the FSA for 2021.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.