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IRS Issues Publication 560 for 2018 Reporting

Government Affairs

The IRS has issued a new version of Publication 560, “Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)" for use in 2018 reporting.

In addition to information about filing, Publication 560 contains information on the following:

  • what type of plan to set up;
  • how to set up a plan;
  • how much you can contribute to a plan;
  • how much of your contribution is deductible;
  • how to treat certain distributions;
  • how to report information about the plan to the IRS and your employees;
  • basic features of SEP, SIMPLE, and qualified plans; and
  • the key rules for SEP, SIMPLE, and qualified plans.

New for 2018 Reporting

The IRS made the following changes to the form for 2018 reporting:

Compensation limits. For 2018, the maximum compensation used for figuring contributions and benefits is $275,000. This limit increases to $280,000 for 2019.

Elective deferral limits. The limit on elective deferrals, other than catch-up contributions, is $18,500 for 2018 and increases to $19,000 for 2019. These limits apply to participants in SARSEPs, as well as 401(k) (excluding SIMPLE plans), 403(b) and 457(b) plans.

Defined contribution limits. The limit on contributions, other than catch-up contributions, for a participant in a DC plan is $55,000 for 2018 and increases to $56,000 for 2019.

Defined benefit limits. The limit on annual benefits for a participant in a DB plan is $220,000 for 2018 and increases to $225,000 for 2019.

SIMPLE plan salary reduction contribution limit. The limit on salary reduction contributions, other than catch-up contributions, is $12,500 for 2018 and increases to $13,000 for 2019.

Catch-up contribution limits. A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. The catch-up contribution limitation for defined contribution plans other than SIMPLE plans is $6,000 for 2018 and 2019. The catch-up contribution limitation for SIMPLE plans is $3,000 for 2018 and 2019.

A participant’s catch-up contributions for a year can’t exceed the lesser of the following amounts.

  • The catch-up contribution limit.
  • The excess of the participant's compensation over the elective deferrals that are not catch-up contributions.

Changes to the hardship distribution rules for 401(k) plans. The Bipartisan Budget Act of 2018, P.L. 115-123, made changes to the hardship distribution rules for plan years beginning after Dec. 31, 2018:
 

  • Removes the 6-month prohibition on contributions following a hardship distribution.
  • Permits hardship distributions to be made from contributions, earnings on contributions, and employer contributions.
  • Eliminates any requirement to take plan loans prior to taking a hardship distribution.

Tax relief for victims of Hurricanes Michael and Florence. Certain retirement plans can make loans and hardship distributions to employees and their family members who live or work in disaster areas affected by Hurricane Michael or Florence. To qualify for this relief, loans and hardship withdrawals must be made by March 15, 2019.