Changes to IRS Maximums for 2008
It’s that time of year again when all employers need to get ready to update their systems and processes for the new year’s payroll tax rates and other IRS-determined parameters. We have previously reported to you on the new rates for mileage reimbursement.
What follows are the new maximum amounts that can be contributed pre-tax for these types of plans, along with the Internal Revenue Code (IRC) section that applies:
|
Plan Type |
2007 Maximum |
2008 Maximum |
|
Tax sheltered annuity (IRC 403(b)) |
$15,500 |
No change |
|
Deferred compensation (IRC 457) |
$15,500 |
No change |
|
Health Savings Account (IRC 223) |
$2,850 single/$5,650 family |
$2,900 single/$5,800 family |
The maximum amount of earnings subject to Social Security tax is going up $4,500 in 2008 to $102,000 from $97,500.
Additionally, for “qualified high deductible health plans”—health plans that can be paired with a health savings account—the requirements for 2008 are:
· Minimum deductible: $1,100 single/$2,200 family
· Maximum out-of-pocket: $5,600 single/$11,200 family
And remember that, although contributions to health savings accounts are not taxable at the federal level, state law has not yet been modified to provide the tax break. So, employers who offer health savings account-compatible health plans need to report the contributions as taxable income for state income tax purposes. We hope that this gets resolved in the 2008 legislative session.
—Kathleen O’Sullivan and Sheila Vickers