Benefits Insight

IRS Increases Most Retirement Plan Limits for 2019

The IRS has released its annual update for the cost-of-living adjustments for 2019. Consistent with last year, elective deferral limits for 401(k) and 403(b) plans increased another $500 from $18,500 to $19,000, the annual compensation limit increased $5,000 from $275,000 to $280,000, the defined contribution plan limit received another $1,000 bump, up to $56,000, and the defined benefit plan limit was again increased $5,000 to $225,000. The Social Security taxable wage base was increased again, but unlike last year (increase of $1,200), this time there will be a larger increase of $4,500 for 2019 to $132,900.

Additional changes were also made this year that increased the SIMPLE IRAs and 401(k) elective deferral limit by $500 from $12,500 to $13,000, the definition of highly compensation employee by $5,000 from $120,000 to $125,000, and changed the definition of key employee in a top heavy plan from an officer with an annual compensation greater than $175,000 to an officer with an annual compensation greater than $180,000.

The new amounts as well as the 2018 amounts are listed in the chart below.

2018

2019

ELECTIVE DEFERRAL ANNUAL LIMITS
    401(k), 403(b) and SEPs  $18,500  $19,000
    457 Plans  $18,500  $19,000
    SIMPLE IRAs and 401(k)s  $12,500  $13,000
 CATCH-UP CONTRIBUTIONS
    401(k), 403(b) and SEPs  $6,000  $6,000
    SIMPLE IRAs and 401(k)s  $3,000  $3,000
 COMPENSATION LIMIT  $275,000  $280,000
 DEFINED BENEFIT PLAN LIMIT  $220,000  $225,000
 DEFINED CONTRIBUTION PLAN LIMIT  $55,000  $56,000
 HIGHLY COMPENSATED EMPLOYEE  $120,000  $125,000
 KEY EMPLOYEE
    Officers  $175,000  $180,000
    1% Owner  $150,000  $150,000
 SOCIAL SECURITY TAXABLE WAGE BASE  $128,400  $132,900