IRS Announces Retirement Plan Limits for 2019

The Internal Revenue Service has announced the 2019 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans.  The Social Security Administration (SSA) has also announced the taxable wage base for 2019.

  2019 2018
Elective Deferral Limit (401(k) & 403(b) Plans)     $19,000 $18,500
Catch Up Contributions (Age 50 and over) $6,000 $6,000
Annual Defined Contribution Limit $56,000 $55,000
Annual Compensation Limit       $280,000   $275,000
Highly Compensated Employee Threshold $125,000 $120,000
Key Employee Compensation $180,000 $175,000
Social Security Wage Base $132,900 $128,700

Elective Deferral Limit means the maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).

Catch-up Contributions refers to the additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits. Catch-up contributions were initiated under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and made permanent by the Pension Protection Act.

Annual Contribution Limit means the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation, and is applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account.

Annual Compensation Limit means the maximum compensation amount that can be considered in calculating contribution allocations and non-discrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).

Highly Compensated Employee Threshold means the minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).

Social Security Wage Base is the maximum amount of earnings subject to Social Security payroll taxes.