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Northwest OH Legal Blog

Thursday, November 2, 2017

Internal Revenue Service Issues 2018 Cost-of-Living Adjustments for Retirement Plan Limits

On October 19, 2017, the Internal Revenue Service (“IRS”) announced cost-of-living adjustments to dollar limitations for items affecting tax-qualified retirement plans under the Internal Revenue Code (“Code”) in 2018. The announcement includes the following highlights for 2018: 

  • The elective deferral (contribution) limit for employees who participate in Code Section 401(k), 403(b), most 457 plans, and the federal government’s thrift savings plan increased by $500, from $18,000 in 2017 to $18,500 in 2018.
  • The catch-up contribution limit for the above-listed plans for employees aged 50 and over remains unchanged from the limit in 2017, $6,000.
  • The annual benefit limitation for defined benefit plans under Code Section 415(b)(1)(A) increased by $5,000, from $215,000 in 2017 to $220,000 in 2018.
  • The annual addition limit for defined contribution plans under Code Section 415(c)(1)(A) increased by $1,000, from $54,000 in 2017 to $55,000 in 2018. 

The following table sets forth the Code limits applicable to 401(k) plans, profit sharing plans, and defined benefit plans for 2018, with a comparison to such limits for 2017 and 2016.

Limits under Applicable Code Section

2018

2017

2016

Annual Compensation Limit - 401(a)(17)/404(l)

275,000

270,000

265,000

Elective Deferrals under 401(k) Plan - 402(g)(1)

18,500

18,000

18,000

Catch-Up Contributions under 401(k) Plan - 414(v)(2)(B)(i)

6,000

6,000

6,000

Annual Addition Limit for Defined Contribution Plans - 415(c)(1)(A)

55,000

54,000

53,000

Highly Compensated Employee Threshold - 414(q)(1)(B)

120,000

120,000

120,000

Annual Benefit Limit for Defined Benefit Plans - 415(b)(1)(A)

220,000

215,000

210,000

Key Employee Compensation Threshold - 416(i)(1)(A)(i)

175,000

175,000

170,000

Taxable Wage Base for Social Security Taxes

128,700

127,200

118,500

 

 

If you have any questions or concerns regarding this communication, please do not hesitate to call Allotta | Farley Co., LPA.

 


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