The Internal Revenue Service announced cost-of-living adjustments affecting certain dollar limitations for pension plans and other retirement-related limitations for 2018, as detailed in Notice 2017-64.
The following chart details the 2018 retirement plan dollar limitation cost-of-living adjustments:
|Maximum annual benefit under a defined benefit plan under IRC Section 415(b)(1)(A)||$215,000||$220,000|
|Maximum annual contribution to an individual’s defined contribution plan account under IRC Section 415(c)||$54,000||$55,000|
|Maximum amount of annual compensation that may be taken into account for determining benefits or contributions to retirement plans under IRC Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii)||$270,000||$275,000|
|Maximum Section 401(k), 403(b) and 457(b) elective deferrals||$18,000||$18,500|
|Dollar amount for determining maximum account balance in an employee stock ownership plan subject to a 5-year distribution period under IRC Section 409(o)(1)(C)(ii)||$1,080,000||$1,105,000|
|Dollar amount used for determining the lengthening of the 5-year distribution period in an employee stock ownership plan under IRC Section 409(o)(1)(C)(ii)||$215,000||$220,000|
|Limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan under IRC Section 664(g)(7)||$45,000||$50,000|
|Wage Base For Social Security Tax||$127,200||$128,700*|
* October 13, 2017 SSA announcement
Notably, the following limits remain unadjusted for 2018:
- The catch-up contribution limit for employees who are age 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
- The limit on annual contributions to an IRA remains unadjusted at $5,500 and the additional catch-up contribution limit for individuals age 50 and over remains $1,000.
- The limitation used in the definition of “highly compensated employee” under IRC Section 414(q)(1)(B) remains unchanged at $120,000.
- The minimum compensation amount under IRC Section 408(k)(2)(C) for simplified employee pensions (SEPs) remains $600.
- The limitation under IRC Section 408(p)(2)(E) for salary deferral contributions to SIMPLE retirement accounts remains unadjusted at $12,500.
- Amount of compensation to be a “key” employee under IRC Section 416(i)(1)(A)(i) remains unchanged at $175,000.