Tag Archives: 2019

You can increase your Flexible Spending Contribution…

Employees can sock away another $50 in their flexible spending accounts next year.

The IRS announced that the annual contribution limit to FSAs will be $2,700 in 2019, up from the 2018 limit of $2,650. The increase also applies to limited-purpose FSAs that are restricted to dental and vision care services, which can be used in tandem with health savings accounts.

For a dependent care FSA, the 2019 contribution limit for an individual who is married but filing jointly is $2,500. For married couples filing jointly or single parents filing as head of household, the limit is $5,000. That limit is not changed from 2018.

ObamaCare Plans taking a drop – in some areas

Two weeks to go before the ObamaCare ACA open Enrollment season begins-  Well, its not really a season as it is only 5 weeks long.  Don’t miss it!

According to an article in the Wall Street Journal, “Average rates for popular health plans sold under the Affordable Care Act will fall 1.5% next year, according to the Trump administration, the first such drop and a sign that the insurance markets are gaining firmer traction despite tumult in the past two years.

The decrease will affect average premiums for the second-cheapest plans in the “silver” tier, a middle-cost option, after years of double-digit increases. In contrast, the average rate for those plans increased by 37% between 2017 and 2018, the administration said.”

However, averages can be misleading.  In NY the average increase is about 11%, and in South Carolina its 5%.  In Iowa, insurer Medica is lowering rates – but that’s after a 57% increase last year.  Tennessee expects a 26% drop, Deleware a 16% increase, with double digits in many other states.

2019 ObamaCare Rate requests surfacing

Fox News in an article (click here) is reporting as follows:

Maryland insurers Carefirst, Kaiser, Blue Cross and Blue Shield are requesting an average 30 percent increase.  Some of the richer PPO plans have a 91% rate increase request.    Virginia is following suits with increases of up to 64%, although Anthem Healthkeepers is only requesting 6%.


These are the first two states to release information on pending increases;  all increases have to be approved by the State Insurance Departments.

Changes in your 401k plan in 2019- Hardship Rules

A number of 401k plan changes were included in the Bipartisan Budget Act, specifically around Hardship with drawals and repaying plan loans:


Hardship Withdrawals:  Currenlty, employees seeking to take money out of their 401(k) accounts are limited to the funds they contributed themselves.  They must first take a loan from the same account, which has to be repaid.

Due to the Bipartisan Budget Act, the rules will change in 2019. Employees’ withdrawal limit will include not just amounts they have contributed, but also employer matching contributions plus earnings on contributions. If someone has been participating in the 401(k) for several years, this could add substantially to the amount of funds available in the event of a legitimate hardship.

Employees will be able to stay in the plan and continue to contribute starting in 2019, currently they are banned for 6 months after the Hardship Withdrawal.  Plan sponsors won’t be required to unenroll and then re-enroll employees after that six-month hiatus.

One thing that hasn’t changed: Hardship withdrawals are subject to income tax, plus a 10 percent tax penalty. That could take a substantial bite out of the amount withdrawn, effectively forcing account holders to take out more dollars than they otherwise would have.

Hardship criteria

There has been no change to the criteria for a hardship withdrawal:

Such a withdrawal “must be made because of an immediate and heavy financial need of the employee and the amount must be necessary to satisfy the financial need.” That can include the need of an employee’s spouse or dependent, as well as that of a nonspouse, nondependent beneficiary.

The IRS goes on to say that the meaning of “immediate and heavy” depends on the situation. It also assumes the employee doesn’t have any other way to meet the needs. The following are examples offered by the IRS:

• Qualified medical expenses (which presumably don’t include cosmetic surgery)

• Costs relating to the purchase of a principal residence

• Tuition and related educational expenses

• Payments necessary to prevent eviction from, or foreclosure on, a principal residence

• Burial or funeral expenses

• Certain expenses for the repair of damage to a principal residence

Repaying Plan Loans as an ex-employee

Prior to 2018, if an employee with an outstanding plan loan left their employer, he or she would have to repay the loan within 60 days to avoid having it deemed as a taxable distribution (and subject to a 10 percent premature distribution penalty for employees under age 59-1/2).

The TCJA changed that deadline to the latest date the former employee can file his or her tax return for the tax year in which the loan amount would otherwise be treated as a plan distribution. So, for example, if someone with an outstanding loan of $5,000 changed jobs on Dec. 31, 2017, he or she would have until April 15 (or, with a six-month filing extension, Oct. 15), 2018, to repay the loan.

Alternatively, he or she could make a contribution of the same amount owed ($5,000, in this example) to an IRA or their new employer’s plan, assuming the new plan permitted it. That $5,000 contribution would be treated the same as a rollover from the old plan.

As always, please consult your tax adviser should you have any questions.

Blog Archives

Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
FINRA.org - SIPC - Brokercheck