<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=690758617926394&amp;ev=PageView&amp;noscript=1">
Skip to content

IRS announces 401(K) contribution limits for 2018

Written by Complete Payroll

IRS announces 401(K) contribution limits for 2018.png

IRS announces 401(K) contribution limits for 2018.png

The Internal Revenue Service (IRS) just increased the 401(k) contribution limit for 2018. In 2018, investors will be able to contribute up to $18,500 of their paycheck to their workplace retirement plan. This increase is $500 above the previous limit. It's also the IRS's first increase since 2015.

Maximum contribution from all sources also increasing

But that only includes what employees contribute to employer-sponsored plans like 401(k)s, 403(b)s, most 457 plans and the Thrift Savings Plan (for federal employees).

The maximum contribution from all sources will also be increasing (by $1,000 from last year) to $55,000.

Talk to an expert about setting up payroll.

 

IRAs and income phase-outs

Contribution limits to Roth or traditional individual retirement accounts are staying the same at $5,500. However, income phase-out ranges are coming.

If an employee and their spouse are not covered by a retirement plan at work, they're allowed to deduct from their taxes what they contribute to a traditional IRA. (Learn more about the IRA deduction limits from the IRS website here.)

That being said, if an employee or their spouse has a workplace retirement plan (or access to one), the amount they can deduct from their taxes phases out - based on their income and filing status. Here are the new phase-out ranges:

  • $63,000 to $73,000 for single taxpayers (up $1,000 from last year)
  • $101,000 to $121,000 for married couples filing jointly, where the IRA contributor is covered by a workplace retirement plan (up $2,000 from last year) 
  • $189,000 to $199,000 for married couples filing jointly, where the IRA contributor is not covered by a workplace plan but their spouse is (up $3,000 from last year) 

Income also determines whether or not an employee is eligible to contribute to a Roth IRA. The new phase-out ranges for 2018 are:

  • $120,000 to $135,000 for single taxpayers (up $2,000 from last year)
  • $189,000 to $199,000 for married couples filing jointly (up $3,000)

The catch-up contribution limits for those 50 and older have not changed. It’s still $6,000 for employer-sponsored plans and $1,000 for IRAs.

 

New Call-to-action

Get The Newsletter

Bi-weekly on Thursdays. We compile HR best practices, labor law updates & other content to help you pay and manage your workforce more effectively.

Ready For a Move to the Country?

Talk to Sales