IRS announced the 2019 COLA adjustments to retirement plan limits on November 1, 2018 in Notice 2018-83.
Elective deferrals for 401(k), 403(b), etc. plans rise from $18,500 to $19,000, plus $6,000 for those age 50 or older.
The limit on defined contribution accounts increases from $55,000 to $56,000.
The definition of a key employee in a top-heavy plan rises from $175,000 to $180,000.
The definition of a highly compensated employee is now $125,000, up from $120,000.
The maximum amount an employee can defer to a SIMPLE plan rises from $12,500 to $13,000.
The deductible amount under IRA limits rises to $6,000 from $5,500, plus an additional $1,000 for those age 50 or older.
These numbers are particularly important for those attempting to initiate a pension plan by year-end in order to decrease income and potentially avoid the income limitation thresholds of §199A – especially those applicable to service businesses.
Nick Spoltore is VP of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware.