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IRS Releases Inflation Adjustments for 2018
-Update- The Social Security Administration has updated the 2018 Taxable Wage Base since this e-Alert was originally sent. The 2018 Taxable Wage Base is now $128,400.
Each year the Internal Revenue Service (IRS) announces the new limits for various aspects of employee benefits plans, principally because of the increase in the applicable cost-of-living indexes. In general, most plan limitations will not change for 2018 because the increase in the cost-of-living index did not meet the statutory threshold that triggers their adjustment. The IRS announced the following limits and thresholds effective for plan years beginning in 2018.
2018 Pre-tax Limits Released
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2017
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2018
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Highly Compensated Salary
Definition
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$120,000
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$120,000
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Key Employee in Top-Heavy Plan Salary Definition
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$175,000
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$175,000
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Maximum Pre-Tax Contribution Limits
(401(k)/403(b), most 457 Plans)
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$18,000
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$18,500
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Pre-Tax 401(k) Catch-up Limits
(over age 50)
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$6,000
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$6,000
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Catch-up Contribution
SIMPLE 401(k) plans
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$3,000
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$3,000
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Maximum Salary Deferral SIMPLE 401(k) plans
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$12,500
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$12,500
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Minimum Compensation Amount
SEPs
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$600
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$600
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Maximum Compensation Amount
(401(a) plans, 403(b) plans, SEPs)
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$270,000
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$275,000
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Health Savings Accounts (HSA) Limits
(employer + employee)
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Individual-$3,400
Family-$6,750
Catch Up- $1,000
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Individual-$3,450
Family-$6,900
Catch Up- $1,000
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Maximum Out-of-Pocket
HSA High Deductible Health Plan (HDHP)
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Individual-$6,550
Family- $13,100
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Individual-$6,650
Family- $13,300
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Minimum Deductible
HSA High Deductible Health Plan (HDHP)
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Individual-$1,300
Family- $2,600
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Individual-$1,350
Family- $2,700
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Transportation Benefits
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Parking - $255
Transit - $255
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Parking - $260
Transit- $260
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Medical Out-of-Pocket Expenses
Flexible Spending Accounts (FSA)
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$2,600
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$2,650
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Dependent Care Expenses
Flexible Spending Accounts (FSA)
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$5,000
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$5,000
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Social Security Taxable Wage Base
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$127,200
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$128,400
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Next Steps for Employers:
- Note the 2018 IRS Benefit and IRA limits; Employers should update their plan documents with the new IRS limits.
- Notify HR Knowledge of all plan changes so we may capture these changes on your benefits-at-a-glance and other important documents by emailing [email protected].
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This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable law in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this advisory please contact HR Knowledge at 508.339.1300 or email us
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About HR Knowledge, Inc.
Founded in 2001, HR Knowledge, Inc. is a privately funded company providing integrated outsourced HR services tailored to our clients' needs. Our full array of offerings includes managed payroll, employee benefits administration, and HR consulting and support services, such as training, compliance, custom-built software solutions, and Hiring Process Management™, our comprehensive recruitment service that takes you from finding to onboarding new talent. Our major markets are fast-growing small- and medium-sized businesses, many of which are venture-capital-backed; foreign companies expanding into the states; and charter schools. Partnering with HR Knowledge can reduce your administrative costs, minimize your legal risk, help you find and develop talent, and alleviate the HR burden so that you can focus on your core business.
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