IRS Puts Out COLA Update

In  Revenue Procedure 2002-70 , the IRS says that for tax years beginning in 2003, employers may exclude the value of transportation benefits provided to an employee for qualified parking up to $190 per month, a $5 increase from the 2002

Limit.   The combined transit pass and vanpooling expense limit will remain $100 per month.

Medical savings accounts (also called Archer MSAs) are available for eligible individuals covered under a high deductible health plan. For tax years beginning in 2003, a plan will be considered a high deductible health plan if:

• for self-only coverage, it has an annual deductible of not less than $1,700 (a $50 increase from 2002) and not more than $2,500 (same as for 2002), and the annual out-of-pocket expenses required to be paid do not exceed $3,350 (a $50 increase);
• for family coverage, it has an annual deductible of not less than $3,350 (a $50 increase) and not more than $5,050 (a $100 increase), and the annual out-of-pocket expenses required to be paid do not exceed $6,150 (a $100 increase).

The maximum credit allowed under Code Section 23 in the case of an adoption of a child with special needs is increased to $10,160 in 2003, as is the maximum credit allowed for other adoptions, and the income threshold at which the credit will begin to phase out is increased to $152,390.

The maximum amount that an employer can exclude under Code Section 137 from an employee’s income for adoption assistance benefits under an employer plan is increased to $10,160.

Late last month the Internal Revenue Service announced  cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2003.