On October 19th the Internal Revenue Service (IRS) announced IRS 2018 Adjusted Retirement plan contribution limits inflation-adjusted figures for retirement account savings for 2018.
- 401(k)s: The amount you can contribute to your 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, increases to $18,500 – a $500 boost over 2017.
- 401(k) Catch-Up: The limit for employees age 50 or older in these plans stays the same at $6,000 for 2018.
- SEP IRAs and Solor 401(k)s: For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) goes up from $54,000 in 2017 to $55,000 in 2018. The contribution is based on the amount allowable to an employer, as a percentage of salary; the compensation limit used in the calculation also goes up from $270,000 in 2017 to $275,000 in 2018.
- After-tax 401(k) contributions: If your employer allows after-tax contributions to your 401(k), you also get the advantage of the $55,000 limit for 2018. It’s an overall cap, including your $18,500 (pre-tax or Roth) salary deferrals plus any employer contributions (but not catch-up contributions).
- Defined Benefit Plans. The limitation on the annual benefit of a defined benefit plan goes up from $215,000 in 2017 to $220,000 in 2018. These are powerful pension plans, typically used by high-earning self-employed people.
To learn more about these contribution plan limits please contact your LSL Advisor.