Gulfshore Insurance > Gulfshore Blog > Employee Benefits > IRS Announces Second Adjustment for 2018 HSA Contribution Limits

The IRS recently announced in a revenue ruling that it will let taxpayers stick with the original $6,900 contribution limit for family coverage and not face excess contribution penalties. As you may recall from our previous alert, in March, due to the new inflation-adjustment calculations required under the Tax Cut and Jobs Act, the IRS announced that the $6,900 limit would be reduced by $50 to $6,850. (The contribution limit for single coverage for 2018 is $3,450.)

The IRS is now allowing taxpayers to treat $6,900 as the annual limitation on deductions for an individual with family coverage, and an individual who receives a distribution from an HSA in excess of the $6,850 limit published in Rev. Proc. 2018-18 may treat that distribution as the result of a “mistake of fact due to reasonable cause” under Q&A-37 of Notice 2004-50. The portion of a distribution (including earnings) that an individual repays to the HSA by April 15, 2019, will not be included in the individual’s income under Sec. 223(f)(2) or be subject to the 20% additional tax under Sec. 223(f)(4). The repayment will not be subject to the excise tax on excess contributions under Sec. 4973(a)(5).

Click here to read the IRS Bulletin.