Benefit Plan Dollar Limits Announced For 2018

Benefit Plan Dollar Limits Announced for 2018

Each year, dollar limits for various payroll-related items are adjusted based on inflation and the cost of living. Here’s a handy table of the 2018 benefit rates that have recently been announced (and in a future newsletter, we’ll provide the updated tax-related limits for next year):

2018 Rate 2017 Rate
Social Security Taxable Wage Base* $128,700 $127,200
Salary Deferrals for 401(k), 403(b), most 457 Plans $18,500 $18,000
Catch Up Contributions** $6,000 $6,000
SIMPLE Plan Contributions $12,500 $12,500
SIMPLE Catch Up Contributions** $3,000 $3,000
IRA Contributions $5,500 $5,500
IRA Catch Up Contributions** $1,000 $1,000
Defined Contribution Plan Annual Additions Limitation $55,000 $54,000
Defined Benefit Plan Annual Benefit $220,000 $215,000
Annual Compensation Limit $275,000 $270,000
Key Employee $175,000 $175,000
Highly Compensated Employee $120,000 $120,000
Medical Reimbursement FSA $2,650 $2,600
Dependent Care FSA $5,000 $5,000

 

*The combined tax rate remains at 7.65% for Social Security and Medicare. Individuals earning more than $200,000 ($250,000 for married filing jointly) pay an additional .9% in Medicare taxes for earnings above that threshold.

**For employees over age 50

If an employee is covered by a qualified retirement plan, the deductibility of a traditional IRA contribution is reduced based on their adjusted gross income and filing status. Here are those ranges for the year 2018:

 

Deduction Phase Out Begins Deduction Completely Phased Out
Single taxpayer covered by employer-sponsored       retirement plan $63,000 $73,000
Married filing jointly, covered spouse making IRA     contribution $101,000 $121,000
Married filing jointly, non-covered spouse making IRA   contribution $189,000 $199,000
Married filing separately, covered spouse making IRA   contribution $0 $10,000

 

Contributions are also phased out based on income for individuals who participate in Roth IRAs. Here are the ranges for the year 2018:

 

Deduction Phase Out Begins Deduction Completely Phased Out
Single taxpayers $120,000 $135,000
Married filing jointly $189,000 $199,000
Married filing separately $0 $10,000