IRS Announces 2018 Retirement Plan Contribution Limits

IRS 2018 Adjusted Retirement plan contribution limits

On October 19th the Internal Revenue Service (IRS) announced IRS 2018 Adjusted Retirement plan contribution limits inflation-adjusted figures for retirement account savings for 2018.

  • 401(k)s:  The amount you can contribute to your 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, increases to $18,500 – a $500 boost over 2017.
  • 401(k) Catch-Up:  The limit for employees age 50 or older in these plans stays the same at $6,000 for 2018.
  • SEP IRAs and Solor 401(k)s:  For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) goes up from $54,000 in 2017 to $55,000 in 2018. The contribution is based on the amount allowable to an employer, as a percentage of salary; the compensation limit used in the  calculation also goes up from $270,000 in 2017 to $275,000 in 2018.
  • After-tax 401(k) contributions:  If your employer allows after-tax contributions to your 401(k), you also get the advantage of the $55,000 limit for 2018.  It’s an overall cap, including your $18,500 (pre-tax or Roth) salary deferrals plus any employer contributions (but not catch-up contributions).
  • Defined Benefit Plans. The limitation on the annual benefit of a defined benefit plan goes up from $215,000 in 2017 to $220,000 in 2018.  These are powerful pension plans, typically used by high-earning self-employed people.

To learn more about these contribution plan limits please contact your ELLS Advisor.

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