In mid-October, the IRS released the 2018 contribution and benefit limits for retirement and other benefit plans types. Each year a review is conducted to determine if changes need to be made to the contribution limits based on the cost of living index and other economic indicators. For 2018, most of the limits will remain the same however there were a few key increases to be aware of. For example, the IRS increased the employee’s contribution limit for 401(k) plan participants from $18,000 per year to $18,500 per year. Also, the defined contribution plan annual contribution limit increased from $54,000 to $55,000. These changes will need to be reflected in your company’s plan administration and payroll processes. To assist clients, prospects and others, Smith Schafer has compiled a summary table reflecting some of the key benefit plan limits below.
| RETIREMENT PLAN LIMITS | 2017 | 2018 |
| Annual compensation limit | $270,000 | $275,000 |
| 401(k), 403(b) & 457(b) employee contributions | $18,000 | $18,500 |
| Catch-up contributions (if age 50 or older) | $6,000 | $6,000 |
| Highly compensated employee threshold | $120,000 | $120,000 |
| Key employee officer compensation threshold | $175,000 | $175,000 |
| Defined benefit plan annual benefit and accrual limit | $215,000 | $220,000 |
| Defined contribution plan annual contribution limit | $54,000 | $55,000 |
| Employee stock ownership plan (ESOP) limit for determining the length of the general five-year distribution plan | $215,000 | $220,000 |
| ESOP limit for determining the maximum account balance subject to the general five-year distribution period | $1,080,000 | $1,105,000 |
| Roth IRA and traditional IRA | $5,500 | $5,500 |
| Roth IRA and IRA catch-up contributions | $1,000 | $1,000 |
| SIMPLE salary deferral | $12,500 | $12,500 |
| SIMPLE catch-up limit | $3,000 | $3,000 |
| HEALTH AND WELFARE PLAN LIMITS | ||
| Health Flexible Spending Accounts maximum salary reduction limit | $2,600 | $2,650 |
| High Deductible Health Plans (HDHP) – maximum annual out-of-pocket limit (excluding premiums): | ||
| Self-only coverage | $6,550 | $6,650 |
| Family coverage | $13,100 | $13,300 |
| HDHP – minimum annual deductible: | ||
| Self-only coverage | $1,300 | $1,350 |
| Family coverage | $2,600 | $2,700 |
| Health Savings Accounts (HSA) – annual contribution limit: | ||
| Self-only coverage | $3,400 | $3,450 |
| Family coverage | $6,750 | $6,900 |
| Catch-up contributions (age 55 or older) | $1,000 | $1,000 |
| SOCIAL SECURITY WAGE BASE | ||
| Social Security Maximum Taxable Earnings (dollars) | $127,200 | $128,700 |
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It is important to update plan documents and benefit plan materials to reflect the recent changes. It is also important to consider any individual participant notification requirements that are necessary to remain in compliance with plan rules. If you have questions about the changes or their impact on your benefit plans, please contact Smith Schafer for assistance. We are also available for benefit plan consulting, plan audit and third-party retirement plan administration needs. For additional information, click here to contact us. We look forward to speaking with you soon.
