Table of Contents
Background on the Plan:
Effective January 2018, the Cost of Living Adjustments for Benefits and Contributions to Qualified Retirement Plans is required under Internal Revenue Code 415(d).
The following adjustments have been made:
- The annual limit on the amount of compensation that can be "taken into account" under section 401(a)(17) pertaining to 401(k) plans increased by $5,000 from $270,000 to $275,000. The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3), which applies to 401(k) and 403(b) plans increased by $500 from $18,000 to $18,500
- The limitation on deferrals under Section 457(e)(15), which applies to deferred compensation plans of state and local governments and tax-exempt organizations (457 plans) increased by $500 from $18,000 to $18,500.
- The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,500.
- The catch-up deferral limit applicable to SIMPLE plan participants who are 50 and older remains unchanged at $3,000.
- The catch-up deferral limit applicable to other defined contribution plans, for participants who are 50 and older, including 401(k) plan participants remains unchanged at $6,000.
- The limitation used in the definition of a highly compensated employee under Section 414(q)(1)(B) remains unchanged at $120,000.
- The limitation for defined contribution plans under Section 415(c)(1)(A) is increased by $1,000 from $54,000 to $55,000 for 2018 (Annual Addition).
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