2018 Qualified Plan LimitsNovember 2017

Qualified retirement plans, such as Internal Revenue Code sections 401(k) and 403(b) plans, pension and profit sharing plans, individual retirement accounts (IRAs), and health flexible spending accounts (Health FSAs) are subject to various dollar limits on the amount of contributions that can be made or benefits that may accrue under such arrangements. Most of these dollar limits are adjusted annually by the IRS for changes in the “cost of living.”

For 2018, some of the key dollar limits affecting the above plans, IRAs and Health FSAs are as follows:
 

Plan/IRA Benefit

2018 Dollar Limit

1.   Elective Deferral Contributions (for 401(k) and 403(b) Plans) $18,500 ($500 increase from 2017)
2.   Annual Contribution Limit (for defined contribution plans) $55,000 ($1,000 increase from 2017)
3.   Annual Benefit Limit (for defined benefit plans) $220,000 ($5,000 increase from 2017)
4.   Annual Compensation Limit (for all qualified retirement plans) $275,000 ($5,000 increase from 2017)
5.   Catch-Up Deferral Contributions (for plan participants age 50 or older under 401(k) and 403(b) plans) $6,000 (no change from 2017)
6.   Highly Compensated Employee definition-compensation threshold (for nondiscrimination testing under all qualified plans, especially 401(k) and 403(b) plans) $120,000 (no change from 2017)
7.   Traditional IRA Contribution Limit (IRA contribution deduction amount subject to income based phase-out) $5,500 (no change from 2017)
8.   Catch-Up Traditional IRA Contribution (for individuals age 50 or older) $1,000 (no change from 2017)
9.   Health FSA Contributions (via employee salary deferrals) $2,650 ($50 increase from 2017)


While the above benefit and contribution limits should be, as applicable, reflected in the plan documents for such plans and accounts, and in the operation of such arrangements, it is important to remember that the elective deferral and, as applicable, related catch-up contribution limits apply on an individual basis.  Thus, if you change jobs during calendar year 2018 and participate in two or more employer-provided 401(k) and/or 403(b) plans, you are entitled to a maximum aggregate elective deferral and catch-up contribution limit under all such plans for 2018 of $18,500 in elective deferrals and $6,000 in catch-up contributions (i.e., one set of elective deferral and catch-up contribution limits apply per individual per calendar year).

Related Practices: Employers and Labor and Employment

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