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Limits on Employer Contributions to LPFSAs

Since employer contributions are set at the company level during plan setup, employees may elect a lower LPFSA contribution than their employer. If the employer's contribution is greater than the employee's contribution, and the employee contributes:

  • more than $500, the employer can only match the lower employee contribution.
  • less than $500, the employer can contribute up to $500.

Employer contribution amounts are set during company plan enrollment, and cannot be changed until the end of the plan year.

Non-elective employer contributions to the LPFSA, such as an employer match, seed contributions or flex credits, generally do not count toward the limit. 

Let's consider some examples:

 

Employee Contribution Employer Contribution Combined Amount Applied to LPFSA
$1500 $1500 (match) $3000
$1000 $1500 (not a match; only $1000 applies) $2000
$1000 $500 (less than employee) $1500
$300 $500 (not a match, but acceptable) $800
$0 $500 $500

 

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