It’s our first year looking into Dependent Care FSA. Amazon Benefits says if I earned more than $125k in 2019, my 2020 contribution limit is $575 instead of $5000 (for married joint filing). Is it an IRS rule? If my husband make less than $125k, can we contribute full $5000 through his employer?
Ask HR for clarification.
Wait.. there’s limitations? Teehee
Not for Microsoft
i see this too, but 575 seems low.. irs says its 3600 for family. what if i contributed from former employer?
All documentation on this seems to put the responsibility on the employer for the highly compensated test. The only IRS limit I think the employee should track is 5k in calendar year (in the new employer scenario).
Under IRS rules, Dependent Care Flexible Spending Accounts (DCFSAs) must meet certain nondiscrimination requirements to qualify for tax-favored benefits. One nondiscrimination test restricts the percentage of compensation that Highly Compensated Employees (HCEs) can contribute on a pre-tax basis to the DCFSA on average as compared to the average for non-HCEs. If you are considered an HCE based on your Amazon compensation from the 2022 calendar year, you will be limited to contributing $575 to your 2022 plan year DCFSA. The reason for this limitation is so that the company will pass nondiscrimination testing and to avoid including the full DCFSA annual contribution amount in your 2022 taxable income.
It’s because you probably are a highly compensated individual compared to most Amazon employees. It is an IRS rule that applies to certain plans.
Thanks. Where can I find the IRS document that explains it? I couldn’t find it