The Internal Revenue Service has announced various 2018 benefit plan limits and thresholds. There are increases from 2017 in some cases, but in other instances, the 2017 amounts will continue to apply.
Retirement and Welfare Benefit Plans
The following chart shows the major 2017 and 2018 benefit plan limits and thresholds. If the applicable limit/threshold increased for 2018, the 2018 amount is shown in boldface.
Limit or Threshold | 2017 | 2018 |
Maximum salary-reduction contribution for an individual to a 401(k) plan or a 403(b) plan or to most 457 plans |
$18,000 |
$18,500 |
Maximum catch-up contribution for an individual age 50 or older, to a 401(k) plan or 403(b) plan or to most 457 plans |
6,000 |
6,000 |
Maximum annual benefit under a qualified defined benefit plan | 215,000 | 220,000 |
Maximum “annual addition” under a qualified defined contribution plan |
54,000 |
55,000 |
Maximum compensation for an individual that can be taken into account under a qualified plan |
270,000 |
275,000 |
Maximum compensation for an individual that can be taken into account under certain governmental plans | 400,000 | 405,000 |
Minimum annual compensation for an individual to be treated as a “highly compensated employee” for the following year | 120,000 | 120,000 |
Minimum annual compensation for an officer to be treated as a “key employee” as to a qualified plan | 175,000 | 175,000 |
Dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period | 1,080,000 | 1,105,000 |
Dollar amount used to determine the lengthening of the five-year distribution period under an employee stock ownership plan | 215,000 | 220,000 |
Maximum salary-reduction contribution for an individual to a SIMPLE retirement plan | 12,500 | 12,500 |
Maximum catch-up contribution for an individual age 50 or older to a SIMPLE retirement plan | 3,000 | 3,000 |
Limit on voluntary employee salary-reduction contributions to a health flexible-spending arrangement under a cafeteria plan | 2,600 | 2,650 |
Maximum annual contribution for an individual with self-only coverage under a high-deductible health plan (HDHP) | 3,400 | 3,450 |
Maximum annual contribution for an individual with family coverage under an HDHP | 6,750 | 6,900 |
Minimum annual deductible under an HDHP with self-only coverage | 1,300 | 1,350 |
Minimum annual deductible under an HDHP with family coverage | 2,600 | 2,700 |
Maximum out-of-pocket expense limit under an HDHP with self-only coverage | 6,550 | 6,650 |
Maximum out-of-pocket expense limit under an HDHP with family coverage | 13,100 | 13,300 |
Individual Retirement Accounts
The following limits will apply to IRAs in 2018:
Wage Base for Social Security Tax
In addition to the above adjustments, the Social Security Administration has announced that the wage base for Social Security taxes for 2018 will be $128,700. The 2017 wage base is $127,200.
For further information, please contact the author of this article, Alexia L. Faraguna, or any other member of the McGuireWoods employee benefits team.