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New IRS and Social Security Administration Dollar Limits

By D|K’s Labor and Employment Team

The IRS has released adjusted dollar limits for employer-sponsored retirement and welfare plans, as well as for individual retirement vehicles effective as of January 1, 2018. Most of these limits have been increased for the coming calendar year.

In addition, the Social Security Administration increased the taxable earnings wage base from $127,200 in 2017 to $128,700 for 2018.

Plan sponsors should update their payroll and plan administration systems to take into account the new limits. In addition, sponsors of safe harbor 401(k) plans can now prepare and send their 2018 annual safe harbor notices showing the contribution limits for the coming year.

Retirement Plan Limits

Pre-tax deferrals under 401(k), 403(b) and 457(b) plans (402(g) limit) $18,000 $18,500
Pre-tax deferrals under SIMPLE 401(k) plans $12,500 $12,500
Catch-up contributions for participants age 50 or older $6,000 $6,000
Defined contribution plan annual contribution limit $54,000 $55,000
Defined benefit plan annual benefit/accrual limit $215,000 $220,000
Annual compensation limit $270,000 $275,000
Highly compensated employee definition $120,000 $120,000
Key employee definition for top-heavy plans $175,000 $175,000
Limit for lengthening the ESOP distribution period $215,000 $220,000
Maximum ESOP account balance subject to a five-year distribution period $1,080,000 $1,105,000



Health & Welfare Plan Limits


High-Deductible Health Plan (HDHP) minimum annual deductible:
Single coverage $1,300 $1,350
Family coverage $2,600 $2,700
HDHP maximum out-of-pocket limit:
Single coverage $6,550 $6,650
Family coverage $13,100 $13,300
HSA annual contribution limit:
Single coverage $3,400 $3,450
Family coverage $6,750 $6,900
Catch-up contributions (age 55 and older) $1,000 $1,000
Qualified Small Employer Health Reimbursement Account Reimbursement Limit:
Single coverage $4,950 $5,050
Family coverage $10,000 $10,250
Flexible Spending Account (FSA) contribution limit:
Health FSA $2,600 $2,650
Dependent Care FSA (single or filing jointly) $5,000 $5,000
Transportation Spending Account
Monthly contributions for parking or mass transit $255 $260

Please contact your Davis & Kuelthau, s.c. attorney, or the related practice group chair linked here if you have any questions.