Many employee benefits are subject to annual dollar limits that are periodically updated for inflation by the Internal Revenue Service (IRS). The following commonly offered employee benefits are subject to inflation-adjusted dollar limits:
High deductible health plans (HDHPs) and health savings accounts (HSAs);
Health flexible spending accounts (FSAs);
401(k) plans; and
Transportation fringe benefit plans.
The IRS typically announces the dollar limits that will apply for the next calendar year well in advance of the beginning of that year. This gives employers time to update their plan designs and make sure that their plan administration will be consistent with the new limits.