2018 401(k) Contribution Limits

This week the IRS came out with changes to the 2018 401(k) contribution limits…and contribution limits for other plans.  This newly-released 2018 401(k) contribution limits also apply to a Solo-K plan (which is also often referred to as an individual 401(k), uni-k plan, self-administered 401(k) and self-directed 401(k)).    While no major changes occurred, any upward change in contribution limits are never a bad thing.

2018 401(k) Contribution Limits

The following changes were made to 2018 401(k) contribution limits for both employees (elective deferrals) and employers:

Employee Elective Deferrals — In simpler terms, employee contributions.  For someone under the age of 50, the employee elective deferral increased $500, from $18,000 to $18,500.

“Catch-Up” Contributions — For those over 50, the additional catch-up contribution was not changed, and remains at $6,000.

Total Annual Maximum Contributions — The total annual limit on 401(k) contributions from all sources increased from $54,000 to $55,000.  Keep in mind, while the total maximum limit is $55,000, if an employee in the plan is over 50 years of age, they can elect to make an additional $6,000 catch-up contribution ($18,500 + $6,000 = $24,500) in total permissible contributions), for a total permissible contribution of $61,000.

HSA’s

In the world of self-direction, the vast majority of people who self-direct will do so through an IRA LLC, IRA Trust and 401(k); however, you may still want to know about an individual and family HSA increased.  An individual HSA had a $50 increase for a total of $3,450, where a family HSA increased $150 from $6,750 to $6,900.

IRAs

Can anyone explain to me why the IRA has not had an increase in contribution limits since 2013?  Yikes, another good reason to consider the 401(k)….if you qualify for the 401(k).  But, sad as it may be, the IRA contribution levels remain the same:  $5,500 for an individual under the age of 50, and $6,500 for an individual over the age of 50.

For all changes to contribution limits to various plans and other changes to various retirement plans, please review the IRS press release.

As always, the information provided is intended to be educational in nature.  It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice.  Please consult with your respective professional in all such matters.