IRS announces 2019 Plan Retirement Limits
On November 1, 2018, the IRS released Notice 2018-83, announcing cost-of-living adjustments (COLAs) that affect contribution limits for retirement plans in 2019. The list below, although not exhaustive, highlights key changes that retirement plan sponsors should be aware of, as well as some limitations that remainunchanged from 2018:
- The elective deferral limit is increasing from$18,500 to $19,000.
- The aggregate contribution limit for definedcontribution plans is increasing from $55,000to $56,000.
- The annual compensation limit used to calculate contributions is increasing from $275,000 to $280,000.
- The limitation on the annual benefit under a defined benefit plan is increasing from $220,000to $225,000. (For a participant who separated from service before January 1, 2019, the limitation for defined benefit plans under Section 415(b)(1)(B) can be computed by multiplying the participant's compensation limitation, as adjusted through 2018, by 1.0264.)
- The dollar limit used in the definition of “key employee” in a top-heavy retirement plan is increasing from $175,000 to $180,000.
- The dollar limit used in the definition of “highly compensated employee” is increasing from $120,000 to $125,000.
- The catch-up contribution limit for employees ages 50 and older remains unchanged at $6,000.
The table below compares the newly announced 2019 retirement plan contribution limits with 2018 limits.
|Plan Feature||2018 Limit||2019 Limit|
|401(k), 403(b), and 457 elective deferral||$18,500||$19,000|
|Aggregate defined contribution||$55,000||$56,000|
|Defined benefit dollar limit||$220,000||$225,000|
|Key employee compensation||$175,000||$180,000|
|Highly compensated employee compensation||$120,000||$125,000|