And the saga continues—yesterday the IRS issued its second amendment this year to the 2018 health savings account (HSA) contribution limit.
After announcing in March that it would reduce the maximum amount that a family can contribute to an HSA to $6,850, due to the Tax Cuts and Jobs Act of 2017, it has now returned to the original $6,900 contribution limit for family coverage.
What’s the big deal about $50? A Forbes.com article explains, “In the world of tax-advantaged savings accounts, excess contributions come with a price. In this case, a 6% excise tax—or $3. Really. So, taxpayers were stuck with the quandary: Do I leave the extra $50 in the account, and pay the $3 (and apply that $50 towards 2019 funding), or do I deal with pulling out the excess contribution? Enough people complained, that the IRS came up with a common-sense solution to go back to the $6,900 limit for 2018.”
The Treasury Department and the IRS determined that it is in the “best interest of sound and efficient tax administration” to allow taxpayers to treat $6,900 as their annual limitation. All other HSA/HDHP dollar limits for the calendar year 2018 remain the same, including the HSA contribution limit for single coverage for 2018, which is $3,450.
Want to know more about HSAs? Read our blog post with frequently asked questions about these triple-tax advantaged accounts.