The Internal Revenue Service has announced the 2019 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans, including deferred compensation plans that may be subject to Internal Revenue Code §409A. The amount by which the limits are adjusted each year is based on a cost of living index. Not all limits increase every year.
The Social Security (OASDI) taxable wage base, which governs the amount of pay subject to Social Security tax withholding and affects plans that are "integrated" with Social Security, also is subject to adjustment annually. For 2019, the OASDI taxable wage base has been increased to $132,900.
Adjusted LimitsLimits increased from 2018 in red |
|
| Provision | 2019 Limit |
| Maximum 401(k) Contributions | $19,000 |
| Maximum Compensation Limit | $280,000 |
| Highly Compensated Employees Earning (in previous year)
more than
|
$125,000 |
| Key Employee Compensation Limit | $180,000 |
| Annual Contribution Limit for Defined Contribution Plans | $56,000 |
| Annual Benefit Limit for Defined Benefit Plans | $225,000 |
| SIMPLE Plan Limit | $13,000 |
| Age 50 and Older Catch-Up Contribution Limit All plans other than SIMPLE
Plans
SIMPLE Plans |
$6,000 $3,000 |
| Annual Contribution Limit for Section 457 Deferred Compensation Plans (government and tax-exempt organizations) | $19,000 |
| ESOP Maximum account balance
subject to five-year distribution period
Each dollar amount of in excess of account balance that adds one year to distribution period |
$1,130,000 $225,000 |
| Simplified Employee Pension Plans (SEPs) Contributions must be made for
employees earning at least
|
$600 |
| 409A Minimum Specified Employee (Officer) Compensation Requirement | $180,000 |
| 409A Involuntary Separation Pay Exception | $560,000 |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.