Health and Welfare Plan Inflation-Adjusted Limits for 2017

HR Alert
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October 2016

In order to avoid costly penalties and administratively burdensome correction procedures, plan sponsors must remain up-to-date with respect to applicable Health and Welfare plan limits. Yesterday,October 26, 2016, the IRS announced cost-of-living adjustments affecting 2017 dollar limitations for Health and Welfare plans and other related Health and Welfare Benefits items. We’ve included some of the most commonly used business benefits below, and the entire IRS publication is available HERE. While some limits remain the same, there have been a number of adjustments.

Health and Welfare Plan Inflation-Adjusted Limits for 2017
Item IRS Code Section 2017 Limit 2016 Limit Note
Unearned Income of Minor Children Taxed as if Parent’s Income 1(g) $1,050 $1,050 The child’s gross income must be greater than $1,050 but less than $10,500.
Adoption Credit 23 $13,750 $13,460 The credit begins to phase out for taxpayers with modified adjusted gross income more than $203,540.
Employee Health Insurance Expense of Small Employers 45R $26,200 $25,900 The limit of $26,500 is used in calculations to determine the actual credit for an employer.
Cafeteria Plans 125 $2,600 $2,550 Limit on voluntary employee salary reductions for contributions to health FSA.
Qualified Transportation Fringe Benefit 132(f) $255 limit on commuter highway vehicle

$255 limit on qualified parking

$130 limit on commuter highway vehicle and transit pass

$255 limit on qualified parking

Monthly limit on the amount that may be excluded from an employee’s income for qualified transportation benefits.
Adoption Assistance Programs  137 $13,570 $13,460 The credit begins to phase out for taxpayers with modified adjusted gross income more than $203,540.
Hall Benefits Law, LLC recommends that you consult with ERISA legal counsel to assist you with any questions you may have regarding applicable limits for your Health and Welfare Benefits plans.

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