IRS Announces 2019 Employee Benefit Plan Limits

Overview


The IRS recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2019. Although some of the dollar limits currently in effect for 2018 will remain the same, the majority of the limits will experience minor increases for 2019.

On Thursday, November 15, 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 (guidance link).

In Depth


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.*

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.