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CLIENT ALERT

October 26, 2017

2018 Employee Benefits Plans and Transportation Limits

By: Larry A. Ruff, CPA, MBA

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.

For further information about the new IRS employee plan limits, contact Larry Ruff at lruff@orba.com or 312.670.7444 ORBA for assistance.

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