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IRS Announces 2018 Qualified Retirement Plan Limits

The IRS recently announced cost-of-living adjustments for 2018. Below is a list of some of the key annual limits that will apply to qualified retirement plans in 2018: Compensation limit used in calculating a participant’s benefit accruals: increased to $275,000. Elective deferrals to 401(k) and 403(b) plans: increased to $18,500. Annual additions to a defined contribution plan: increased to $55,000. Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: remains unchanged at $6,000. Annual benefit limit for a defined benefit plan: increased to $220,000. Compensation dollar limit for defining a “key employee” in a top heavy plan: remains unchanged at $175,000. Compensation dollar limit for defining a “highly compensated employee”: remains unchanged at $120,000. The full list of 2018 plan limits can be found in IRS Notice 2017-64.

Fringe and Welfare Benefit Limit Increases for 2018

On October 19, 2017, the IRS released Revenue Procedure 2017-58, which increases the 2018 limits for certain fringe and welfare benefits as follows: Health Care Flexible Spending Accounts: The maximum amount an employee may contribute toward a healthcare flexible spending account through salary reduction is $2,650. Qualified Transportation Benefits: The monthly limits for qualified parking expenses and commuter highway expenses/transit passes are $260. The limit for qualified bicycle commuting reimbursements is unchanged ($20 per month). Adoption Assistance Programs: The maximum amount that can be excluded from an employee’s gross income for qualified adoption expenses provided through an adoption assistance program is $13,840. This limit phases out for taxpayers whose modified adjusted gross income is over certain limits. Qualified Small Employer Health Reimbursement Arrangement (“QSEHRA”): The reimbursement limit for a QSEHRA is $5,050 for individual coverage and $10,250 for family coverage. QSEHRAs are limited to small employers with fewer than 50… Continue Reading

October 2017
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