The IRS recently announced the cost-of-living adjustments applicable to certain dollar limitations for employee pension benefit plans for 2019. The resulting dollar limits are as follows:
- The annual benefit limit for defined benefit plans is increased from $220,000 to $225,000.
- The annual addition limit for defined contribution plans is increased from $55,000 to $56,000.
- The annual limit with respect to the exclusion for elective deferrals to a 401(k), 403(b) or 457 plan is increased from $18,500 to $19,000.
- The limit on annual contributions to an individual retirement arrangement (IRA) is increased from $5,500 to $6,000. The dollar limit for an additional catch-up contribution to an IRA for individuals age 50 or older remains unchanged at $1,000.
- The annual limit on compensation that can be taken into account under a qualified retirement plan is increased from $275,000 to $280,000.
- The dollar limit for determining key employees in a top-heavy plan is increased from $175,000 to $180,000.
- The dollar amount for determining the maximum account balance in an employee stock ownership plan (ESOP) subject to a five-year distribution period is increased from $1.105 million to $1.130 million. The dollar amount used to determine the lengthening of the five-year distribution period is increased from $220,000 to $225,000.
- The dollar limit for catch-up contributions for 401(k) plans for individuals age 50 or older remains unchanged at $6,000. In addition, the dollar limit under SIMPLE plans and SIMPLE IRAs for catch-up contributions for participants who are age 50 or older remains unchanged at $3,000.
- The limitation used in the definition of “highly compensated employee” is increased from $120,000 to $125,000.
A complete list of applicable pension plan limitations can be found here.
If you have any questions about the cost-of-living adjustments or any other employee benefits or executive compensation matter, please contact a member of Day Pitney’s Employee Benefits and Executive Compensation practice group.
Day Pitney Alert
November 2, 2018
Day Pitney Author(s) Kathy A. Lawler David P. Doyle Liza J. Hecht Thomas F.J. O’Mullane