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2019 Cost-of-Living Adjustments on IRS Benefit and Contribution Limits

Author: Catherine R. Reese (Indianapolis)

Published Date: November 5, 2018

On November 1, 2018, the Internal Revenue Service (IRS) announced the cost-of-living adjustments affecting tax-qualified pension plans for 2019. Most of the general pension limitations, including the limit on annual compensation that can be taken into account and the individual limits on elective deferrals and annual contributions, will increase based on the cost-of-living index. The individual limits on catch-up contributions for participants age 50 and over will not change for 2019. In the following table, we have listed some of the key limits that will continue to affect tax-qualified pension plans, including those that will increase for 2019 and those that will remain unchanged:

Code or Regulation Section
2018
2019
Internal Revenue Code (IRC) §401(a)(17) / 404(l)
Annual Compensation
$275,000
$280,000
IRC §402(g)(1)
Elective Deferral Limit
$18,500
$19,000
IRC §414(v)(2)(B)(i)
Catch-Up Contribution Limit
$6,000
$6,000
IRC §415(b)(1)(A) Defined Benefit Plan Limit
$220,000
$225,000
IRC §415(c)(1)(A)
Defined Contribution Plan Limit
$55,000
$56,000
IRC §457(e)(15)
Deferral Limit
$18,500
$19,000
IRC §414(q)(1)(B)
Highly Compensated Employee Threshold
$120,000
$125,000
Income Tax Regulations §1.401(a)(9)-6, A-17(b)(2)(i)
Qualifying Longevity Annuity Contract Premium Limit
$130,000
$130,000
IRC §409(o)(1)(C)(ii)
Employee Stock Ownership Plan (ESOP) - Maximum Balance Subject to 5-year Distribution
$1,105,000
$1,130,000
IRC §409(o)(1)(C)(ii)
ESOP - Dollar Amount to Determine Lengthening of 5-year Distribution
$220,000
$225,000
IRC §416(i)(1)(A)(i)
Key Employee Threshold
$175,000
$180,000
IRC §408(p)(2)(E)
SIMPLE Maximum Contribution Limit
$12,500
$13,000
IRC §414(v)(2)(B)(ii)
SIMPLE Catch-Up Contribution Limit
$3,000
$3,000
IRC §408(k)(2)(C)
Simplified Employee Pension (SEP) Minimum Compensation
$600
$600
IRC §408(k)(3)(C)
SEP Maximum Compensation
$275,000
$280,000
Income Tax Regulations §1.61-21(f)(5)(i)
“Control Employee” Compensation Threshold (Officer)
$110,000
$110,000
Income Tax Regulations §1.61-21(f)(5)(iii)
“Control Employee” Compensation Threshold (Non-Officer)
$220,000
$225,000
Social Security Taxable Wage Base
$128,700
$132,900

Catherine R. Reese  (Indianapolis)

Catherine R. Reese
Ms. Reese concentrates her practice in employee benefits. She works with employers to design, establish and administer qualified retirement plans (defined contribution, defined benefit, cash balance), welfare benefit plans, and nonqualified deferred compensation plans. She assists clients in complying with statutory and regulatory requirements for reporting and disclosure, testing, and corrections for benefit plans, as well as assisting with IRS, DOL and PBGC filings, audits, and queries. Ms....

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