On March 5, 2018, the Internal Revenue Service (“IRS”) announced a reduction to the 2018 contribution limit for family coverage under a high deductible health plan from $6,900 to $6,850.
This reduction is due to a provision in the Tax Cuts and Jobs Act that replaces the consumer price index with a “chained consumer price index” for indexing dollar thresholds applicable to HSAs. The table below presents the amended 2018 cost-of-living adjustments for retirement, health and welfare plans, and transportation programs for the revised family coverage limit.
Retirement Plan Limits
Notable 2018 annual retirement plan limitations, as compared to 2017, are as follows:
|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|
|FICA taxable wage base||128,400||127,200|
Health and Welfare Plan Limits
The 2018 annual limitations, as compared to 2017, are as follows:
|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|
|Minimum deductible for HDHP||1,350||1,300|
|Maximum OOP expense limit for HDHP||6,650||6,550|
|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:
|Parking and Transit||$260||$255|
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, amended IRS employee plan limits, contact Larry Ruff at email@example.com or 312.670.7444 ORBA for assistance.