Locke Lord QuickStudy: IRS Announces 2018 Retirement Plan Limitations - Certain Limits are Increased
The Internal Revenue Service announced the 2018 cost-of-living adjustments to the dollar limitations for qualified retirement plans and other benefits, and the Social Security Administration announced its own cost-of-living adjustments for 2018. The elective deferral contribution limit for 401(k), 403(b) and 457(b) plans will increase to $18,500 but the dollar limit for catch-up contributions (if age 50 or older) remains unchanged at $6,000. Other limits, such as the annual compensation limit under 401(a)(17), the limit used in the definition of key employee and the maximum annual contribution limit under Code Section 415, will increase in 2018.
RETIREMENT PLAN LIMITS AND SOCIAL SECURITY WAGE BAS
|
2018 Limits |
2017 Limits |
|
|
401(k)/403(b)/457(b) Elective Deferrals |
$18,500 |
$18,000 |
|
Catch-Up Contribution (plans other than SIMPLE plans) |
$6,000 |
$6,000 |
|
SIMPLE Plan Employee Deferrals |
$12,500 |
$12,500 |
|
SIMPLE Plan Catch-Up Contributions |
$3,000 |
$3,000 |
|
Plan Maximum Annual Contribution – Defined Contribution Plans (Section 415(c)) |
$55,000 |
$54,000 |
|
Maximum Annual Benefit – Defined Benefit Plans (Section 415(b)) |
$220,000 |
$215,000 |
|
Compensation Limit under Section 401(a)(17) |
$275,000 |
$270,000 |
|
Highly Compensated Employee Definition under Section 414(q) |
$120,000 |
$120,000 |
|
Key Employees Officer Compensation for Top-Heavy Plans |
$175,000 |
$170,000 |
|
ESOP limit for determining the maximum account balance subject to the 5-year distribution limit |
$1,105,000 |
$1,080,000 |
|
ESOP dollar amount used for determining the lengthening of the 5-year distribution period |
$220,000 |
$215,000 |
|
Social Security (FICA) Wage Base |
$128,700 |
$127,200 |
HEALTH AND WELFARE PLAN LIMITS
Health Flexible Spending Accounts
|
2018 Limits |
2017 Limits |
|
|
Maximum Salary reduction limit |
$2,650 |
$2,600 |
Health Savings Account and High Deductible Health Plan Limits
Earlier this year, the IRS announced the inflation-adjusted amounts for health savings account and high-deductible health plans for 2018. The HSA limit for self-only/family coverage will increase to $3,450 and $6,900, respectively for 2018. The minimum annual deductible and maximum annual out-of-pocket expense limits for high deductible health plans for both self-only and family coverage will increase in 2018.
Health Savings Accounts/HDHP Limits
|
2018 Limits |
2017 Limits |
|
|
HSA Contribution -- Annual Contribution Limit |
||
|
Self-Only Coverage |
$3,450 |
$3,400 |
|
Family Coverage |
$6,900 |
$6,750 |
|
Catch-Up Contributions (age 55 or older) |
$1,000 |
$1,000 |
|
High Deductible Health Plan – Minimum Annual Deductible |
||
|
Self-Only Coverage |
$1,350 |
$1,300 |
|
Family Coverage |
$2,700 |
$2,600 |
|
High Deductible Health Plan – Maximum Out of Pocket Limit |
||
|
Self-Only Coverage |
$6,650 |
$6,550 |
|
Family Coverage |
$13,300 |
$13,100 |
Contribution Plans (Section 415(c)) $54,000 $53,000Maximum Annual Benefit – Defined Benefit
Plans (Section 415(b)) $215,000 $210,000Compensation Limit under Section 401(a)(17) $270,000 $265,000Highly Compensated Employee Definition under Section 414(q) $120,000 $120,000Key Employees Officer Compensation for Top-Heavy Plans
$175,000 $170,000Maximum ESOP Account Balance Subject to 5-Year Distribution Period $1,080,000 $1,070,000Social Security (FICA) Wage Base $127,200 $118,500
| 2018 Limits | 2017 Limits | |
| 401(k)/403(b)/457(b) Elective Deferrals | $18,500 | $18,000 |
| Catch-Up Contribution (plans other than SIMPLE plans) | $6,000 | $6,000 |
| SIMPLE Plan Employee Deferrals | $12,500 | $12,500 |
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