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Social Security Administration Revises 2018 Taxable Wage Base Cost-of-Living Adjustment

On Behalf of | Dec 5, 2017 |

On November 27, 2018, the Social Security Administration issued a press release announcing its revision of the maximum amount of earnings subject to Social Security tax for 2018 from $128,700, as announced on October 13, 2017, to $128,400. The Social Security Administration indicated that the lowering of the 2018 cost-of-living adjustment to the Social Security wage base was a result of corrected W2 data it received from a national payroll service provider in late October.

Below is the chart detailing the 2018 retirement plan dollar limitation cost-of-living adjustments included with our October 19, 2017 Law Alert, refleting the updated Social Security tax wage base amount.

Limitation Description 2017 2018
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 $128,400