IRS Releases 2021 Cost of Living Adjustments for Certain Tax Provisions
Yesterday, the IRS released IRS Revenue Procedure 2020-45 which provides the 2021 cost-of-living increases for inflation for certain items. In addition, the IRS also released today Notice 2020-79 which provided the 2021 COLA increases for retirement plans, including 401(k) plans.
| Taxable Years Beginning in 2021 | Taxable Years Beginning in 2020 | |
| Limit on voluntary employee salary reduction contributions to a health flexible spending arrangement (Section 3.17 of Rev. Proc. 2020-45) | $2,750 | $2,750 |
| Monthly limit on fringe benefit exclusion for transit and parking (Section 3.18 of Rev. Proc. 2020-45) | $270 | $270 |
| Maximum exclusion for qualified adoption expenses furnished pursuant to an adoption assistance program (Section 3.20 of Rev. Proc. 2020-45) | $14,440 | $14,300 |
| Maximum reimbursement from a qualified small employer health reimbursement arrangement (QSEHRA) (Section 3.62 of Rev. Proc. 2020-45) | $5,300 ($10,700 for family coverage) | $5,250 ($10,600 for family coverage) |
| Maximum contribution limit for employees contributing to a 401(k), 403(b) or 457 plan (Notice 2020-79) | $19,500 | $19,500 |