IRS Announces Retirement Plan Benefits & Contribution Limits for 2018
Annual Benefit Limit for Defined Benefit Plans ($220,000)
This limitation on the annual benefit payable as a straight life annuity under a defined benefit plan, for ages 62 to 65, is equal to the lesser of 100% of the average annual compensation, or $220,000, with indexing for future cost of living. This statutory limit was $215,000 for 2017 and has been increased to $220,000 for 2018.
Annual Addition Limit for Defined Contribution Plans ($55,000)
Since the enactment of EGTRRA, defined contribution plans have been subject to an "annual addition" limit for each participant that cannot exceed the lesser of 100% of compensation, or $55,000. This statutory limit was $54,000 for 2017 and has been increased to $55,000 for 2018.
Limit on Pre-Tax Salary Deferrals to Retirement Plans ($18,500)
Salary deferrals into Section 401(k) plans, Section 403(b) arrangements and Section 457(b) plans are subject to a statutory limit of $18,500. This statutory limit was $18,000 for 2017 and has been increased to $18,500 for 2018.
SIMPLE Plan Contribution Limit ($12,500)
The statutory limit on contributions to SIMPLE plans under Section 408(p)(2)(E) is $12,500. This statutory limit was $12,500 for 2017 and remains unchanged for 2018.
Catch-Up Contributions ($6,000 for 401 (k), SEPs, 403(b) and 457(b) plans; $3,000 for SIMPLE plans)
The additional catch‐up contribution, which is allowed for individuals age 50 and over, in a 401(k) plan, 403(b) plan, 457(b) plan, or a Simplified Employer Pension (SEP), was $6,000 for 2017 and remains unchanged for 2018. In addition, the catch‐up contribution for SIMPLE IRAs and SIMPLE 401(k) plans was $3,000 for 2017 and remains unchanged for 2018.
Highly Compensated Employee Dollar Limitation ($120,000)
The dollar limit for determining who is a highly compensated employee under Section 414(q) was $120,000 for 2017 and remains unchanged for 2018.
Key Employees in Top-Heavy Plans ($175,000)
In determining who is a key employee under top‐heavy plans, Section 416(i) includes officers with compensation greater than
$175,000. That dollar limitation was $175,000 for 2017 and remains unchanged for 2018.
Limit on Compensation Taken Into Account in Retirement Plans ($275,000)
The maximum amount of compensation that can be taken into account for qualified plan purposes was $270,000 for 2017 and has been increased to $275,000 for 2018.
Social Security Wage Base ($128,700)
The Social Security wage base was $127,200 for 2017 and has been increased to $128,700 for 2018.
The statutory limit on IRA contributions was $5,500 in 2017 and remains unchanged for 2018.
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