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IRS Announces Contribution, Benefit Limits for 2019

Practice Management

The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019. The 2019 limits are contained in Notice 2018-83, released Nov. 1.

The limits for 2019 are as follows:

The limitation under Code Section 402(g)(1) on the exclusion for elective deferrals described in Code Section 402(g)(3) is $19,000. The IRS set the 2018 level at $18,500; the level for 2016 and 2017 was $18,000.

The limitation on deferrals under Code Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is $19,000 for 2019. The 2018 and 2017 levels were $18,500 and $18,000, respectively.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000; the 2018 levels were $189,000 and $199,000, respectively.

The AGI phase-out range for taxpayers making contributions to a Roth IRA is $193,000 to $203,000 for married couples filing jointly; the 2018 range was $189,000 to $199,000. For singles and heads of household, the income phase-out range is $122,000 to $137,000; the 2018 range was $120,000 to $135,000.

The AGI limit for the Saver’s Credit (also known as the retirement savings contribution credit) under Code Sections 25B(b)(1)(C) and 25B(b)(1)(D) is as follows:

  • $64,000 for married couples filing jointly; the 2018 level was $63,000;
  • $48,000 for heads of household; the 2018 level was $47,250; and
  • $32,000 for married individuals filing separately and for singles; the 2018 level was $31,500.

The limitation on the annual benefit under a defined benefit plan under Internal Revenue Code Section 415(b)(1)(A) is $225,000; the 2018 level was $220,000, while the level for 2017, 2016 and 2015 was $215,000. For a participant who separated from service before Jan. 1, 2019, the limitation for defined benefit plans under Code Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2018, by 1.0264.

The limitation for defined contribution plans under Code Section 415(c)(1)(A) is $56,000; the 2018 and 2017 limits were $55,000 and $54,000, respectively.

The dollar amount under Code Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period is $1,130,000; the level for 2018 was $1,105,000, and for 2017 it was $1,080,000. The dollar amount used to determine the lengthening of the five-year distribution period is $225,000 for 2019; the 2018 and 2017 levels were $220,000 and $215,000, respectively.

The dollar limitation under Code Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is set at $180,000 for 2019; the level for 2017 and 2018 was $175,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b) most 457 plans, and the federal government’s Thrift Savings Plan is $6,000, which was also 2018 level.

The limit for an individual making qualified retirement contributions is $6,000; the limit for 2018 and 2017 was $5,500.

The dollar limitation under Code Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer is $6,000, which was also the level for 2018 and 2017. The dollar limitation under Code Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Code Section 401(k)(11) or Code Section 408(p) for individuals aged 50 or over is $3,000, which was also the level for 2018 and 2017.

The limitation under Code Section 408(p)(2)(E) regarding SIMPLE retirement accounts is $13,000; the 2018 level was $12,500.

Compensation Limits

The annual compensation limit under Code Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is $280,000; the 2018 level was $275,000, and the level 2017 was $270,000.

The limitation used in the definition of a highly compensated employee under Code Section 414(q)(1)(B) for 2019 is $125,000; for 2018 and 2017 it was $120,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Code Section 401(a)(17) to be taken into account, is $415,000; it was $405,000 in 2018 and $400,000 in 2017.

The compensation amount under Code Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is $600, which was also the 2018 level.

The compensation amount under Treas. Reg. §1.61 21(f)(5)(i) concerning the definition of “control employee” for fringe benefit valuation is $110,000 for 2019, which was also the level in 2018; it was $105,000 in 2017. The compensation amount under Treas. Reg. §1.61 21(f)(5)(iii) is $225,000; it was $220,000 in 2018 and $215,000 in 2017.

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