Effective for plan years beginning after December 31, 2018, participants may receive hardship distributions comprised of employee elective deferrals, employer contributions and earnings on both. Traditionally, hardship distributions were limited to employee elective deferrals and did not include qualified nonelective contributions, qualified matching contributions, safe harbor contributions or earnings on the same.
In Revenue Procedure 2018-18, the Internal Revenue Service announced a reduction in the HSA contribution limit for family coverage in 2018 to $6,850 from $6,900. The self-only HSA contribution limit for 2018 remains unchanged at $3,450.
This change is a technical result of the Tax Cuts and Jobs Act, which adjusted the method for calculating inflation. Although the reduction may appear somewhat small, it may cause certain employees to inadvertently contribute over the limit. For instance, an employee who front-loads his or her annual contribution may have already exceeded the new limit.
This post has been updated as of June 7, 2018, to reflect the revised maximum annual HSA contribution limit for family coverage set out in Revenue Procedures 2018-18 and 2018-27.
The IRS recently announced cost-of-living adjustments for 2018 in Notice 2017-64 and related guidance. The key dollar limits for qualified retirement plans and health and welfare plans are noted below.