IRS Announces 2019 Pension Plan Limits

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Today, the IRS issued Notice 2018- 83 announcing the cost of living adjustments for pension plans and other retirement-related items for the tax year 2019. Some of the more notable changes are below:

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the saver’s credit all increased for 2019.

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000.

  • The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

  • The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2019.

Some of the limitations that will remain unchanged from 2018

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 remains unchanged at $6,000.

2019 limitations used for purposes of pension and cafeteria plan nondiscrimination testing increase as follows:

  • The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan will increase from $175,000 to $180,000 in 2019.

  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) will increase from $120,000 to $125,000 in 2019.

Note: Keep in mind that employers will use the prior year’s compensation for current plan year testing. This announcement of updates will impact the testing for the 2020 plan years.

Please see Notice 2018-83 for a full description of the changes for 2019.

 

Categories: Benefits in General, Compliance | Tags: IRS , Pension Plans , 2019 Limits , IRS Notice 2018-83 , Highly compensated employee , Key Employee , Nondiscrimination Testing , IRA , 401k , 457 , 403(b) , Roth IRA | Return