IRS

IRS Releases Information Letter on Returning HSA Contributions to an Employer

Generally, a person’s interest in a Health Savings Account (HSA) is nonforfeitable. However, in the past, the Internal Revenue Service’s Notice 2008-59 described limited circumstances under which an employer may recoup contributions made to an employee’s HSA.

The Internal Revenue Service (IRS) recently released Information Letter 2019-0033 (Letter), clarifying that IRS Notice 2008-59 was not intended to provide an exclusive set of circumstances in which an employer can recoup contributions made to an HSA. If there is clear evidence of an administrative or process error, an employer may request that the contributions it made to an employee’s HSA be returned. This correction should put the employer and employee in the same position that they would have been in if the error had not occurred. 

The Letter lists the following examples of when an employer may recoup HSA contributions:

  • An amount withheld and deposited in an employee’s HSA for a pay period is greater than the amount shown on the employee’s HSA salary reduction election.

  • An employee receives an employer contribution that the employer did not intend to contribute but the amount was transmitted because an incorrect spreadsheet is accessed or because employees with similar names are confused with each other.

  • An employee receives an incorrect HSA contribution because it is incorrectly entered by a payroll administrator (whether in-house or third-party) causing the incorrect amount to be withheld and contributed.

  • An employee receives a second HSA contribution because duplicate payroll files are transmitted.

  • An employee receives as an incorrect HSA contribution because a change in employee payroll elections is not processed timely so that amounts withheld and contributed are greater than (or less than) the employee elected.

  • An employee receives an incorrect HSA contribution because an HSA contribution amount is calculated incorrectly, such as a case in which an employee elects a total amount for the year that is allocated by the system over an incorrect number of pay periods.

  • An employee receives an incorrect HSA contribution because the decimal position is set incorrectly resulting in a contribution greater than intended.

Originally posted on UBABenefits.com

IRS Releases 2019 Inflation-Adjusted Limits | California Benefits Agents

The Internal Revenue Service (IRS) released its inflation-adjusted limits for various benefits. For example, the maximum contribution limit to health flexible spending arrangements (FSAs) will be $2,700 in 2019. Also, the maximum reimbursement limit in 2019 for Qualified Small Employer Health Reimbursement Arrangements will be $5,150 for single coverage and $10,450 for family coverage.

Read more about the 2019 limits.

By Karen Hsu
Originally posted on UBABenefits.com

Redesigned W-4 Form to Launch in 2020 | CA Benefits Partners

W-4 form.jpg

When will the new Form W-4 be released? In 2020, according to a press release published by the Treasury Department on September 20, 2018. The department announced that the IRS will implement a redesigned W-4 form for tax year 2020, a timeline that will allow for continued work to refine the new approach for the form.

As a result of the enactment of the 2017 Tax Cuts and Jobs Act, the Treasury Department and the IRS are revising the wage withholding system and Form W-4, Employee’s Withholding Allowance Certificate. In June 2018, the IRS released a draft redesigned form for public comment and received many suggestions for improvements, which they are working to integrate.

For tax year 2019, the IRS will release an update to the Form W-4 that is similar to the 2018 version currently in use. The 2019 form will be released in the coming weeks according to the usual practice for annual updates.

The Treasury Department and IRS will continue working closely with the payroll and the tax community as additional changes are made to the Form W-4 for use in 2020. The intent of these additional changes is to make the withholding system more accurate and more transparent to employees. The IRS will release the 2020 form and related guidance and information early enough in 2019 to allow employers and payroll processors ample time to update their systems.


by Samantha Yurman
Originally posted on thinkhr.com

Final Rule on Short-Term Limited-Duration Insurance | California Benefits Firm

On August 1, 2018, the Internal Revenue Service, the Department of Health and Human Services (HHS), and the Department of Labor (collectively, the Departments) released a final rule that amends the definition of short-term, limited-duration insurance. HHS also released a fact sheet on the final rule.

According to the Departments, the final rule will provide consumers with more affordable options for health coverage because they may buy short-term, limited-duration insurance policies that are less than 12 months in length and may be renewed for up to 36 months.

The final rule will apply to insurance policies sold on or after October 2, 2018.

For more information, contact us!


by Karen Hsu
Originally posted on ubabenefits.com