EBIA Weekly Newsletter

IRS: 2018 Retirement Plan Dollar Limits Are Not Affected by Tax Cuts and Jobs Act

   February 8, 2018

IRS News Release IR-2018-19 (Feb. 6, 2018)

The IRS has issued a news release announcing that the tax year 2018 dollar limitations for qualified retirement plans set forth in Notice 2017-64 (see our Checkpoint article) are not affected by the tax legislation enacted at the end of 2017 known as the “Tax Cuts and Jobs Act” (see our Checkpoint article). The news release explains that the legislation did not change the Code provision limiting retirement plan contributions and benefits (i.e., Code § 415, which supplies the adjustment method for the qualified retirement plan limits), so the previously announced 2018 limits for qualified retirement plans remain unchanged. And while the legislation did change how the cost-of-living adjustments for certain other limits are determined (limits adjusted under the Code §1(f)(3) methodology)—including the income thresholds for the saver’s credit and the contribution limit and income thresholds for IRAs—the 2018 amounts for those limits under the new method are the same as under the old method due to the applicable rounding rules.

EBIA Comment: Retirement plan sponsors and administrators can take comfort in this confirmation that the legislation did not affect the qualified retirement plan limits, so no plan administrative changes are necessary with respect to those limits. Note that the news release does not address health and welfare plan limits, some of which are adjusted for cost-of-living changes using the Code §1(f)(3) methodology that was changed by the tax legislation. These include limits on health FSA salary reduction contributions (see our Checkpoint article about 2018 health and welfare plan limits) and various HSA limits (see our Checkpoint article about 2018 HSA limits). It is unclear whether the 2018 amounts for these other limits remain the same under the new methodology, although no change in limits has been announced. For more information, see EBIA’s 401(k) Plans manual at Sections II.H.2 (“Retirement Savings Contributions Credit for Certain Income-Eligible Plan Participants”), X (“Contributions: The Code’s Annual Limitations”), and XVIII.K.2 (“HCE Compensation Threshold”). See also EBIA’s Cafeteria Plans manual at Section XIX.F (“Limitation on Health FSA Salary Reductions”) and EBIA’s Consumer-Driven Health Care manual at Sections X (“HSAs: Required HDHP Coverage”) and XII (“HSAs: Contributions”).

Contributing Editors: EBIA Staff.