Starting in 2013, the IRS caps the amount that can be contributed to a Flexible Spending Account at $2,500 per year, adjusted annually for inflation.
In 2019, the maximum FSA contribution is $2,700.
FSA contributions are subject to the irrevocable election rule. Basically, the employee decides at the beginning of the year how much he or she is going to contribute, and this amount cannot be changed later in the year.
An FSA is a use-it-or-lose-it account, so it’s important not to contribute more than is needed to the FSA. Up to $500 can be rolled over to the next year IF the employer allows the rollover. The $500 rollover does not reduce the maximum FSA contribution the next year but can make the employee ineligible for an HSA if he or she switches to an HDHP.
Employer contributions do not count toward the $2,700 limit
Employers are allowed to make contributions toward their employee’s Flexible Spending Accounts, and the employer contribution amount does not count toward the $2,700 limit.
There are limitations to how much the employer can contribute, and this is based on the employee’s contribution amount. Basically, the total amount available to the employee is the greater of a) twice the employee contribution (ex: employee contributes $2,700, employer contributes $2,700) OR b) the employee contribution + $500 (ex: employee contributes $0, employer contributes $500).