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Maximum Benefits and Contributions Limits

The Internal Revenue Service (IRS) has set the maximum benefits and contribution limits for the tax year 2018. More information about what has changed for 2018 can be found at the IRS website – IRS Announces 2018 Pension Plan Limitations; 401(k) Contribution Limit Increases to $18,500 for 2018.

Advisors and Human Resource (HR) professionals should convey to employees their plan contribution limits and encourage those who can defer extra dollars for retirement savings to do so. While not all plan participants will be able to fund their 401(k) accounts up to the maximum, the contribution cap is a goal they should keep in mind.

2018 Maximum Benefits & Contributions Limits Chart

LIMIT
2018
2017
CHANGE

Elective Deferrals 401(k) and 403(b)

$18,500

$18,000

+ $500

457(b)(2) and 457(c)(1)

$18,500

$18,000

+ $500

Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans

$6,000

$6,000

Defined Benefit Plans

$220,000

$215,000

+ $5,000

Defined Contribution Plans (Annual Additions)

$55,000

$54,000

+ $1,000

Annual Compensation Limit

$275,000

$270,000

+ $5,000

Annual Compensation Limit [Grandfathered Participants in Governmental Plans Which Followed 401(a)(17) Limits (With Indexing) on July 1, 1993]

$405,000

$400,000

+ $5,000

Highly Compensated Employee (HCE)

$120,000

$120,000

Key Employee/Officer

$175,000

$175,000

Individual Retirement Accounts (IRA) – Individuals <= 49

$5,500

$5,500

Individual Retirement Accounts (IRA) – Individuals >= 50

$6,500

$6,500

SIMPLE Retirement Accounts

$12,500

$12,500

SEP Coverage

$600

$600

SEP Compensation

$275,000

$270,000

+ $5,000

Tax Credit ESOP Maximum Balance

$1,105,000

$1,080,000

+ $25,000

Amount for Lengthening of 5-Year ESOP Period

$220,000

$215,000

+ $5,000

Maximum Amount for Qualified Longevity Annuity Contract Purchases

$130,000

$125,000

+ $5,000

Income Subject to Social Security Tax

$128,400

$127,200

+ $1,200

FICA Tax for employers

7.65%

7.65%

FICA Tax for employees

7.65%

7.65%

Social Security Tax for employers

6.2%

6.2%

Social Security Tax for employees

6.2%

6.2%

Medicare Tax for employees and employers

1.45%

1.45%

SECA Tax for self-employed workers

15.3%

15.3%

Social Security Tax for self-employed workers

12.4%

12.4%

Medicare Tax for self-employed workers

2.9%

2.9%

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