The Internal Revenue Service (IRS) has announced the 2018 cost-of-living adjustments for transportation programs and retirement and health and welfare plans. Once again, the cost-of-living index did not change significantly this year. This means that there were few changes to the IRS 2018 limitations as compared to 2017. The one significant change is to the FICA taxable wage base, which changes are based on the average wage index.
Retirement Plan Limits
Notable 2018 annual retirement plan
limitations, as compared to 2017, are as follows:
| 2018 | 2017 | |
| 401(k), 403(b) & 457(b) plan employee deferrals | $18,500 | $18,000 |
| Employee age 50 catch-up contribution | 6,000 | 6,000 |
| SIMPLE plan employee deferrals | 12,500 | 12,500 |
| SIMPLE plan age 50 catch-up contribution | 3,000 | 3,000 |
| IRA contribution limit (traditional and Roth) | 5,500 | 5,500 |
| IRA age 50 catch-up contribution | 1,000 | 1,000 |
| Defined contribution plan limit | 55,000 | 54,000 |
| Defined benefit plan limit | 220,000 | 215,000 |
| Annual compensation limit | 275,000 | 270,000 |
| Highly-compensated employee | 120,000 | 120,000 |
| Key employee | 175,000 | 175,000 |
| FICA taxable wage base | 128,700 | 127,200 |
Health and Welfare Plan Limits
The 2018 annual limitations, as compared
to 2017, are as follows:
| 2018 | 2017 | |
| Flexible Spending Account FSA | $2,650 | $2,600 |
| Dependent Care FSA (not indexed) | 5,000 | 5,000 |
| HSA age 55 catch-up contribution (not indexed) | 1,000 | 1,000 |
| Self-only Coverage: | ||
| HSA contribution | 3,450 | 3,400 |
| Minimum deductible for HDHP | 1,350 | 1,300 |
| Maximum OOP expense limit for HDHP | 6,650 | 6,550 |
| Family Coverage: | ||
| HSA contribution | 6,900 | 6,750 |
| Minimum deductible for HDHP | 2,700 | 2,600 |
| Maximum OOP expense limit for HDHP | 13,300 | 13,100 |
HSA = Health Savings Account
HDHP = High Deductible Health Plan
OOP = Out-Of-Pocket
Qualified Transportation Fringe Benefits
The 2018 monthly qualified
transportation fringe benefit limitations, as compared to
2017, are as follows:
| 2018 | 2017 | |
| Parking and Transit | $260 | $255 |
| Bicycle | 20 | 20 |
Plan sponsors should update payroll and plan administration systems for the 2018 cost-of-living adjustments and should incorporate the new limits in relevant employee and participant communications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
