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2018 IRS Tax Limits

2018 Cost of Living Adjustments Announced

 

401(k) Pension Plan Limits

 

 

2018

 

 

2017

 

 

2015-2016

 

 

2014

 

 

2013

 

 

2012

 

 

2011

401k Elective Deferrals $18,500 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
Annual Defined Contribution Limit $55,000 $54,000 $53,000 $52,000 $51,000 $50,000 $49,000
Annual Defined Benefit Limit $220,000 $215,000 $210,000 $210,000 $205,000 $200,000 $195,000
Annual Compensation Limit $275,000 $270,000 $265,000 $260,000 $255,000 $250,000 $245,000
Catch-Up Contribution Limit $6,000 $6,000 $6,000 $5,500 $5,500 $5,500 $5,500
Highly Compensated Employees $120,000 $120,000 $120,000 $115,000 $115,000 $115,000 $110,000

 

Non 401(k) Related Limits

       
403(b)/457 Elective Deferrals $18,500 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
SIMPLE Employee Deferrals $12,500 $12,500 $12,500 $12,000 $12,000 $11,500 $11,500
SIMPLE Catch-Up Deferral $3,000 $3,000 $3,000 $2,500 $2,500 $2,500 $2,500
Social Security Wage Base $128,700 $127,200 $118,500 $117,000 $113,700 $110,100 $106,800

The Internal Revenue Service (IRS) has issued Notice 2017-64 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2018.

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,000 to $18,500. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.

Effective January 1, 2018, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $215,000 to $220,000. For a participant who separated from service before January 1, 2018, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2017, by 1.0196. The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2018 from $54,000 to $55,000.

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $18,000 to $18,500.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $175,000. The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $120,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $600. The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,500.

Other contribution/benefit limits

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $63,000 for married couples filing jointly, up from $62,000; $47,250 for heads of household, up from $46,500; and $31,500 for singles and married individuals filing separately, up from $31,000.

The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $270,000 to $275,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from $1,080,000 to $1,105,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $215,000 to $220,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $400,000 to $405,000.

The limitation under Section 664(g)(7) concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan is increased from $45,000 to $50,000.

The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation is increased from $105,000 to $110,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $215,000 to $220,000.

The dollar limitation on premiums paid with respect to a qualifying longevity annuity contract under Section 1.401(a)(9)-6, A-17(b)(2)(i) of the Income Tax Regulations is increased from $125,000 to $130,000.

The Code provides that the $1,000,000,000 threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is adjusted using the cost-of-living adjustment provided under Section 432(e)(9)(H)(v)(III)(bb). After taking the applicable rounding rule into account, the threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is increased for 2018 from $1,012,000,000 to $1,087,000,000.

More limits may be found here.

Contact Details

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Suite 360

Maitland, FL 32751

Phone: 866-625-4611

Fax: 407-740-6113

Email: info@fiduciaryfirst.com 

Disclaimer

Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

 

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