401(k) Contribution Limit Increases for 2018

If you offer a company-sponsored 401(k) plan at your small business, you and your employees can take advantage of some changes to 401(k) contribution limits in 2018. Specifically, contribution limits for employees who participate in 401(k), 403(b), and other select government savings plans will increase from $18,000 to $18,500.

Along with this change, there are a few other highlights for 2018 that might be helpful for you or your employees to know:

  • The qualifying income cap for the Retirement Savings Contribution Credit for workers has increased to $63,000 for married couples filing jointly, $47,250 for heads of household, and $31,500 for single filers.
  • The annual overall limit on contributions to a participant’s account has increased to $55,000 for 2018 (or capped at 100% of the participant’s salary if they are paid less than $55,000).
  • For participants over the age of 50, catch-up contributions remain at $6,000, in addition to the $18,500 limit.
  • The annual limit for IRA contributions will not change from 2017, and remains at $5,500.

2018 401(k) Contribution Limits

Description 2018 2017
Elective Deferral Limit $18,500 $18,000
Catch-Up Contribution Limit* $6,000 $6,000
Annual Benefit Limit $220,000 $215,000
Annual Contribution Limit $55,000 $54,000
Annual Compensation Limit $275,000 $270,000
HCE Threshold** $120,000 $120,000
Key Employee Limit $175,000 $175,000

 

*Available to all employees age 50 and older during the calendar year.

**For 2017, an Highly Compensated Employee (HCE) is an employee who earned more than $120,000 in 2016. For 2018, an HCE is an employee who earned more than $120,000 in 2017.

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