The Internal Revenue Service has announced various 2018 benefit plan limits and thresholds. There are increases from 2017 in some cases, but in other instances, the 2017 amounts will continue to apply.
Retirement and Welfare Benefit Plans
The following chart shows the major 2017 and 2018 benefit plan limits and thresholds. If the applicable limit/threshold increased for 2018, the 2018 amount is shown in boldface.
| Limit or Threshold | 2017 | 2018 |
| Maximum salary-reduction contribution for an individual to a 401(k) plan or a 403(b) plan or to most 457 plans | $18,000 | $18,500 |
| Maximum catch-up contribution for an individual age 50 or older, to a 401(k) plan or 403(b) plan or to most 457 plans | 6,000 | 6,000 |
| Maximum annual benefit under a qualified defined benefit plan | 215,000 | 220,000 |
| Maximum “annual addition” under a qualified defined contribution plan | 54,000 | 55,000 |
| Maximum compensation for an individual that can be taken into account under a qualified plan | 270,000 | 275,000 |
| Maximum compensation for an individual that can be taken into account under certain governmental plans | 400,000 | 405,000 |
| Minimum annual compensation for an individual to be treated as a “highly compensated employee” for the following year | 120,000 | 120,000 |
| Minimum annual compensation for an officer to be treated as a “key employee” as to a qualified plan | 175,000 | 175,000 |
| Dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period | 1,080,000 | 1,105,000 |
| Dollar amount used to determine the lengthening of the five-year distribution period under an employee stock ownership plan | 215,000 | 220,000 |
| Maximum salary-reduction contribution for an individual to a SIMPLE retirement plan | 12,500 | 12,500 |
| Maximum catch-up contribution for an individual age 50 or older to a SIMPLE retirement plan | 3,000 | 3,000 |
| Limit on voluntary employee salary-reduction contributions to a health flexible-spending arrangement under a cafeteria plan | 2,600 | 2,650 |
| Maximum annual contribution for an individual with self-only coverage under a high-deductible health plan (HDHP) | 3,400 | 3,450 |
| Maximum annual contribution for an individual with family coverage under an HDHP | 6,750 | 6,900 |
| Minimum annual deductible under an HDHP with self-only coverage | 1,300 | 1,350 |
| Minimum annual deductible under an HDHP with family coverage | 2,600 | 2,700 |
| Maximum out-of-pocket expense limit under an HDHP with self-only coverage | 6,550 | 6,650 |
| Maximum out-of-pocket expense limit under an HDHP with family coverage | 13,100 | 13,300 |
Individual Retirement Accounts
The following limits will apply to IRAs in 2018:
- The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals age 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
- The deduction for contributions to a traditional IRA is phased out for those who have modified adjusted gross incomes (AGI) within a certain range. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s 2018 AGI is between $189,000 and $199,000, up from $186,000 to $196,000 for 2017. For married couples filing jointly, where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the 2018 AGI phase-out range is $101,000 to $121,000, up from $99,000 to $119,000 for 2017. For single individuals and heads of household who are covered by a workplace retirement plan, the 2018 AGI phase-out range is $63,000 to $73,000, up from $62,000 to $72,000 for 2017. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The 2018 AGI phase-out range for taxpayers making contributions to Roth IRAs in 2018 is $189,000 to $199,000 for married couples filing jointly, up from $186,000 to $196,000 for 2017. For single individuals and heads of household, the 2018 AGI phase-out range is $120,000 to $135,000, up from $118,000 to $133,000 for 2017.
Wage Base for Social Security Tax
In addition to the above adjustments, the Social Security Administration has announced that the wage base for Social Security taxes for 2018 will be $128,700. The 2017 wage base is $127,200.
For further information, please contact the author of this article, Alexia L. Faraguna, or any other member of the McGuireWoods employee benefits team.