Each new year brings new limitations, and the Internal Revenue Service has released its annual cost-of-living adjustments applicable to employee benefit plans. A year-to-year comparison of limitations applicable to plan sponsors can be found here: 2019 Annual Limitations Chart.
Reflecting a slight increase in inflation over the past year, several benefit plan limitations will increase for 2019. The IRS continued its trend from the prior year by increasing the elective deferral limitation for defined contribution plans from $18,500 to $19,000. Additionally, the limit on compensation taken into account under qualified plans will rise from $275,000 to $280,000.
Health and welfare plan participants will also benefit from various increases. The amounts participants are allowed to contribute to health care flexible spending accounts and health savings accounts will increase, while dependent care assistance will remain stagnant for another year. Small employers taking advantage of the opportunity to provide Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) to eligible employees in 2019 can provide increased reimbursements of up to $10,450, from $10,250, for family coverage. (QSEHRA maximums for self-only coverage will increase from $5,050 to $5,150.) Plan participants will also have the opportunity to increase their contributions for qualified transportation expenses from $260 to $265 per month.
The Social Security Tax wage base will increase significantly as compared to prior years, from $128,400 to $132,900. However, FICA tax and Social Security tax percentages will remain the same.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2018. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
