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401(k), 403(b), 457(b) Pre-Tax Contribution Limit Increases to $19,000 for 2019

  • Posted
  • Nov 21, 2018
What's New

401(k), 403(b), 457(b) Pre-Tax Contribution Limit Increases to $19,000 for 2019

The IRS has announced the changes to the dollar limits on benefits and contributions under qualified retirement plans, as well as other items, for tax year 2019 [IRS Notice 2018-83, 11-1-18]. The notice is available on the APA website at https://www.americanpayroll.org/compliance/compliance-overview/annual-irs-annoucements.

IRC §415, which provides for dollar limits on benefits and contributions under qualified retirement plans, also requires that the IRS annually adjust these limits for cost-of-living changes. The IRC also requires various other amounts to be adjusted at the same time and in the same manner as these dollar limits.

  • The limitation on the exclusion for elective deferrals under §402(g)(1) (e.g., §401(k) and §403(b) plans) increases to $19,000 (from $18,500).
  • The limit on annual additions to defined contribution plans under §415(c)(1)(A) increases to $56,000 (from $55,000).
  • The limit on the annual benefit under a defined benefit plan contained in §415(b)(1)(A) increases to $225,000 (from $220,000).
  • The annual compensation limit under §401(a)(17), §404(l), §408(k)(3)(C), and §408(k)(6)(D)(ii) increases to $280,000 (from $275,000).
  • The compensation amount under §408(p)(2)(E) regarding elective deferrals to SIMPLE retirement accounts increases to $13,000 (from $12,500).
  • The limitation under §457(e)(15) concerning elective deferrals to deferred compensation plans of state and local governments and tax-exempt organizations (§457(b) plans) increases to $19,000 (from $18,500).
  • The limitation under §416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan increases to $180,000 (from $175,000).
  • The limitation under §414(v)(2)(B)(i) for catch-up contributions to §§401(k), 403(b), and 457(b) plans for individuals age 50 or over remains unchanged at $6,000; the limitation under §414(v)(2)(B)(ii) for catch-up contributions to an employer’s SIMPLE plan for individuals age 50 or over remains unchanged at $3,000.
  • The limitation used in the definition of “highly compensated employee” under §414(q)(1)(B) increases to $125,000 (from $120,000).
  • The compensation amount under §408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $600.
  • The compensation amount under Treas. Reg. §1.61-21(f)(5)(i), concerning the definition of “control employee” for fringe benefit valuation purposes, remains unchanged at $110,000. The compensation amount under §1.61-21(f)(5)(iii) increases to $225,000 (from $220,000).
  • The limit on annual contributions to an Individual Retirement Arrangement, which last increased in 2013, increases to $6,000 (from $5,500). The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
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