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In mid-October, the IRS released the 2018 contribution and benefit limits for retirement and other benefit plans types. Each year a review is conducted to determine if changes need to be made to the contribution limits based on the cost of living index and other economic indicators. For 2018, most of the limits will remain the same however there were a few key increases to be aware of. For example, the IRS increased the employee’s contribution limit for 401(k) plan participants from $18,000 per year to $18,500 per year. Also, the defined contribution plan annual contribution limit increased from $54,000 to $55,000. These changes will need to be reflected in your company’s plan administration and payroll processes. To assist clients, prospects and others, Smith Schafer has compiled a summary table reflecting some of the key benefit plan limits below. 

RETIREMENT PLAN LIMITS20172018
Annual compensation limit$270,000$275,000
401(k), 403(b) & 457(b)  employee contributions$18,000$18,500
Catch-up contributions (if age 50 or older)$6,000$6,000
Highly compensated employee threshold$120,000$120,000
Key employee officer compensation threshold$175,000$175,000
Defined benefit plan annual benefit and accrual limit$215,000$220,000
Defined contribution plan annual contribution limit$54,000$55,000
Employee stock ownership plan (ESOP) limit for determining the length of the general five-year distribution plan$215,000$220,000
ESOP limit for determining the maximum account balance subject to the general five-year distribution period$1,080,000$1,105,000
Roth IRA and traditional IRA$5,500$5,500
Roth IRA and IRA catch-up contributions$1,000$1,000
SIMPLE salary deferral$12,500$12,500
SIMPLE catch-up limit$3,000$3,000
HEALTH AND WELFARE PLAN LIMITS  
Health Flexible Spending Accounts maximum salary reduction limit $2,600 $2,650
High Deductible Health Plans (HDHP) – maximum annual out-of-pocket limit (excluding premiums):  
Self-only coverage$6,550$6,650
Family coverage$13,100$13,300
HDHP – minimum annual deductible:  
Self-only coverage$1,300$1,350
Family coverage$2,600$2,700
Health Savings Accounts (HSA) – annual contribution limit:  
Self-only coverage$3,400$3,450
Family coverage$6,750$6,900
Catch-up contributions (age 55 or older)$1,000$1,000
SOCIAL SECURITY WAGE BASE  
Social Security Maximum Taxable Earnings (dollars)$127,200$128,700

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It is important to update plan documents and benefit plan materials to reflect the recent changes. It is also important to consider any individual participant notification requirements that are necessary to remain in compliance with plan rules. If you have questions about the changes or their impact on your benefit plans, please contact Smith Schafer for assistance. We are also available for benefit plan consulting, plan audit and third-party retirement plan administration needs. For additional information, click here to contact us. We look forward to speaking with you soon.