IRS Announces 2019 Employee Benefit Plan Limits

By , and on November 2, 2018

Recently the Internal Revenue Service (IRS) and the Social Security Administration announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2019. The table below compares the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2018 and 2019.*

UPDATE: On Thursday, November 11, 2018, the Internal Revenue Service announced that, for calendar year 2019, the annual maximum salary reduction limit for contributions to a health flexible spending account was increased by $50 to $2,700.

RETIREMENT PLAN LIMITS 2018 2019
Annual compensation limit $275,000 $280,000
401(k), 403(b) & 457(b) before-tax contributions $18,500 $19,000
Catch-up contributions (if age 50 or older) $6,000 $6,000
Highly compensated employee threshold $120,000 $125,000
Key employee officer compensation threshold $175,000 $180,000
Defined benefit plan annual benefit and accrual limit $220,000 $225,000
Defined contribution plan annual contribution limit $55,000 $56,000
Employee stock ownership plan (ESOP) limit for determining the lengthening of the general five-year distribution period $220,000 $225,000
ESOP limit for determining the maximum account balance subject to the general five-year distribution period $1,105,000 $1,130,000
HEALTH AND WELFARE PLAN LIMITS
Health Flexible Spending Accounts
Maximum salary reduction limit $2,650 $2,700
High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA)
HDHP – Maximum annual out-of-pocket limit (excluding premiums):
Self-only coverage $6,650 $6,750
Family coverage $13,300 $13,500
HDHP – Minimum annual deductible:
Self-only coverage $1,350 $1,350
Family coverage $2,700 $2,700
HSA – Annual contribution limit:
Self-only coverage $3,450 $3,500
Family coverage $6,900 $7,000
Catch-up contributions (age 55 or older) $1,000 $1,000
SOCIAL SECURITY WAGE BASE
Social Security Maximum Taxable Earnings (dollars) $128,400 $132,900

 

Plan sponsors should update payroll and plan administration systems for the 2019 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.

For further information about applying the new employee benefit plan limits for 2019, contact your regular McDermott lawyer.

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*The dollar limits are generally applied on a calendar year basis; however, certain dollar limits are applied on a plan-year, tax-year, or limitation-year basis.

Jeffrey HoldvogtJeffrey Holdvogt
Jeffrey (Jeff) M. Holdvogt advises clients regarding a wide range of employee benefits matters. He focuses primarily on the design and administration of complex pension, defined contribution and executive deferred compensation arrangements. Jeff counsels privately and publicly held corporations on ongoing day-to-day retirement and executive compensation issues, as well as employee benefits design and transition matters arising from corporate mergers, acquisitions and divestitures. Read Jeff Holdvogt's full bio.


Brian TiemannBrian Tiemann
    Brian J. Tiemann counsels public and private companies on a broad range of employee benefit matters, including matters related to pension plans, 401(k) plans and executive and incentive compensation. He advises plan fiduciaries with respect to their fiduciary duties, investment policies and alternative investments. He also advises multinational clients on global employee benefits matters, particularly with respect to global incentive compensation plans. Brian has extensive experience negotiating investment management agreements and service provider agreements. Read Brian Tiemann's full bio.


Jacob MattinsonJacob Mattinson
Jacob M. Mattinson focuses his practice on employee benefits and matters related to 401(k), 403(b), pension, executive compensation, health care reform, and cafeteria and welfare plans. Jacob assists clients in drafting employee benefit plan documents and amendments. He represents clients in matters before the Internal Revenue Service (IRS), US Department of Labor (DOL) and Pension Benefit Guaranty Corporation with respect to plain qualification issues. Read Jacob Mattinson's full bio.

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