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What Do I Need to Know for December

Qualified Plan Contribution Increases

In addition to reminding your employees to submit a new W4 if their withholding allowances have changed or will change in the next year (i.e., change in marital status), your end of year employee communications should include the following changes to contribution limits for

401(k) and Flexible Spending Arrangements.

401(k) Contribution Limit Increased to $19,500

The IRS has announced that the amounts employees can contribute to 401(k)s and some IRAs will increase in 2020. In particular:

  • The employee contribution limit for 401(k) plans will be $19,500, up from $19,000 in 2019. The catch-up contribution limit for employees aged 50 and over will be $6,500, up from $6,000.

  • The employee contribution limit for IRAs will remain $6,000. The catch-up contribution limit for employees aged 50 and over also remains unchanged, at $1,000.

  • The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans will increase to $13,500, up from $13,000 in 2019.

Flexible Spending Arrangement Limit Increased to $2750.

  • The IRS has announced that the contribution limit for health flexible spending arrangements (health FSAs) will be $2,750 in 2020. For 2019, the contribution limit is $2,700.

Massachusetts Paid Family & Medical Leave Exemptions

If you’re planning to apply for an exemption to the Massachusetts PFML mandatory contributions, you have until December 20. To be eligible for an employer exemption from making PFML contributions, you must offer an approved private plan with paid leave benefits that are equal to or more generous than those provided under the PFML program. Insurance companies are beginning to more fully roll out their private plans.

This will be the only time employers are able to retroactively apply for an exemption – the December 20 deadline is for the quarter ending in December. Going forward, exemptions will only be made prospectively, however this is a onetime exception to accommodate the implementation of the law.

For exemption applications submitted on or after December 21, 2019, your exemption effective date will be the first date of the quarter immediately following approval. For example, if you are approved on December 28, 2019, your effective date will be January 1, 2020. If you are approved on March 1, 2020, your effective date will be April 1, 2020

ACA Marketplace Open Enrollment Ends

The 2020 Open Enrollment Period runs from Friday, November 1 to Sunday, December 15, 2019. If you don't act by December 15, you can't get 2020 coverage unless you qualify for a Special Enrollment Period. Plans sold during Open Enrollment start January 1, 2020.

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