January 31, 2023

Volume XIII, Number 31


January 30, 2023

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2019 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2019 (see IRS Notice 2018-63). Most notably, the limitation on annual salary deferrals into a 401(k) plan will increase from $18,500 to $19,000. The dollar limits are as follows:

LIMIT 2018 2019
401(k)/403(b) Elective Deferral Limit (IRC § 402(g))The annual limit on an employee’s elective deferrals to a Section 401(k) or 403(b) plan made through salary reduction. $18,500 $19,000
Governmental/Tax Exempt Deferral Limit (IRC § 457(e)(15))The annual limit on an employee’s elective deferrals to Section 457 deferred compensation plans of state and local governments and tax-exempt organizations. $18,500 $19,000
401(k)/403(b)/457 Catch-up Limit (IRC § 414(v)(2)(B)(i))In addition to the regular limit on elective deferrals described above, employees age 50 or over generally can make an additional “catch-up” contribution not to exceed this limit. $6,000 $6,000
Defined Contribution Plan Limit (IRC § 415(c))The limitation for annual contributions to a defined contribution plan (such as a 401(k) plan or profit sharing plan). $55,000 $56,000
Defined Benefit Plan Limit (IRC § 415(b))The limitation on the annual benefits from a defined benefit plan. $220,000 $225,000
Annual Compensation Limit (IRC § 401(a)(17))The maximum amount of compensation that may be taken into account for benefit calculations and nondiscrimination testing. $275,000($405,000 for certain gov’t plans) $280,000($415,000 for certain gov’t plans)
Highly Compensated Employee Threshold (IRC § 414(q))The definition of an HCE includes a compensation threshold for the prior year. A retirement plan’s discrimination testing is based on coverage and benefits for HCEs. $120,000(for 2018 HCE determination) $125,000(for 2019 HCE determination)
Key Employee Compensation Threshold (IRC § 416)The definition of a key employee includes a compensation threshold. Key employees must be determined for purposes of applying the top-heavy rules. Generally, a plan is top-heavy if the plan benefits of key employees exceed 60% of the aggregate plan benefits of all employees. $175,000 $180,000
SEP Minimum Compensation Limit (IRC § 408(k)(2)(C))The mandatory participation requirements for a simplified employee pension (SEP) includes this minimum compensation threshold. $600 $600
SIMPLE Employee Contribution Limit (IRC § 408(p)(2)(E))The limitation on deferrals to a SIMPLE retirement account. $12,500 $13,000
SIMPLE Catch-up Limit (IRC § 414(v)(2)(B)(ii)))The maximum amount of catch-up contributions that individuals age 50 or over may make to a SIMPLE retirement account or SIMPLE 401(k) plan. $3,000 $3,000
Social Security Taxable Wage BaseSee the 2019 SS Changes Fact Sheet.


This threshold is the maximum amount of earned income on which Social Security taxes may be imposed (6.20% paid by the employee and 6.20% paid by the employer).

$128,400 $132,900
Jackson Lewis P.C. © 2023National Law Review, Volume VIII, Number 305

About this Author

Kathryn Wheeler Knowledge Management Lawyer Jackson

Kathryn W. Wheeler is the Knowledge Management (“KM”) Attorney for Jackson Lewis P.C.’s Employee Benefits Practice Group, and is based in the Overland Park, Kansas, office of Jackson Lewis P.C. She has more than 24 years in the employee benefits industry, 14 of those years as a benefits manager for private industry. 

Ms. Wheeler has experience with employee benefits from the perspective of clients and of legal counsel, giving her the ability to understand the issues confronting clients from both sides of the table. Her zeal...