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 |