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IRS Announces 2019 Employee Benefit Plan Limits

Summary

The IRS recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2019. Although some of the dollar limits currently in effect for 2018 will remain the same, the majority of the limits will experience minor increases for 2019.

In Depth

Recently the Internal Revenue Service (IRS) and the Social Security Administration announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2019. The table below compares the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2018 and 2019.*

 

RETIREMENT PLAN LIMITS

2018

2019

Annual compensation limit

$275,000

$280,000

401(k), 403(b) & 457(b) before-tax contributions

$18,500

$19,000

Catch-up contributions (if age 50 or older)

$6,000

$6,000

Highly compensated employee threshold

$120,000

$125,000

Key employee officer compensation threshold

$175,000

$180,000

Defined benefit plan annual benefit and accrual limit

$220,000

$225,000

Defined contribution plan annual contribution limit

$55,000

$56,000

Employee stock ownership plan (ESOP) limit for determining the lengthening of the general five-year distribution period

$220,000

$225,000

ESOP limit for determining the maximum account balance subject to the general five-year distribution period

$1,105,000

$1,130,000

     

HEALTH AND WELFARE PLAN LIMITS

   

High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA)

   

HDHP – Maximum annual out-of-pocket limit (excluding premiums):

   

Self-only coverage

$6,650

$6,750

Family coverage

$13,300

$13,500

HDHP – Minimum annual deductible:

   

Self-only coverage

$1,350

$1,350

Family coverage

$2,700

$2,700

HSA – Annual contribution limit:

   

Self-only coverage

$3,450

$3,500

Family coverage

$6,900

$7,000

Catch-up contributions (age 55 or older)

$1,000

$1,000

     

SOCIAL SECURITY WAGE BASE

   

Social Security Maximum Taxable Earnings (dollars)

$128,400

$132,900

Plan sponsors should update payroll and plan administration systems for the 2019 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.

© 2019 McDermott Will & Emery

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About this Author

Jeffrey M. Holdvogt, Employee Benefits, Executive Compensation, McDermott Will Emery, Law Firm
Partner

Jeffrey M. Holdvogt is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office. 

Jeffrey focuses on matters related to employee benefits and executive compensation, including pension, profit sharing, 401(k), ESOPs, welfare and nonqualified deferred compensation plans.   Prior to joining McDermott, Jeffrey served as a law clerk for the Honorable Paul H. Anderson and James H. Gilbert of the Minnesota Supreme Court.

While in law school, he was an...

312-984-7564
Brian J. Tiemann, Labor Attorney, McDermott Law Firm
Partner

Brian J. Tiemann is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.   Brian focuses his practice on a variety of employee benefits matters related to pension plans, 401(k) plans, employee stock ownership plans (ESOPs), cafeteria and welfare plans, executive compensation and the implementation of benefit programs for domestic partners of employees.  He is a member of the Firm’s ESOP Affinity Group and has worked with clients to structure and maintain the qualified status of their ESOPs with the Internal Revenue Service. 

312-984-3268