Employee Benefits Compliance

2018 Dollar Amounts and COLAs for Benefit Plans


The IRS and Social Security Administration each year announce the cost-of-living adjustments affecting tax and employee benefits dollar amounts for the upcoming calendar year. Some highlights for 2018 (& 2017) are listed below. Note that the annual cap on employee pre-tax contributions to a Health FSA (IRC § 125) has increased $50, to $2,650; H.S.A. and HDHP amounts have increased, and the HCE threshold remains the same at $120,000. (This article was amended 3/7/18 to reflect the $50 reduction in the H.S.A. maximum annual contribution for family level coverage, announced by the IRS 3/5/18.)

Tax Benefit20172018
Highly Compensated Employee (HCE) Threshold –  IRC §414(q)(1)(B)$120,000$120,000
Key Employee, Officer –  IRC § 416(i)(1)(A)(i)$175,000$175,000
Social Security Taxable Wage Base   –  § 2230 of Social Security Act$127,200$128,400*
401(k), 403(b), Profit-Sharing Plans:                                                2017                             2018
Maximum Elective Deferrals (annually)   –  IRC § 402(g)(1)$18,000$18,500
Catch-up Contributions     (for those age 50 and older)$ 6,000$ 6,000
Annual Compensation  –  IRC § 401(a)(17)$270,000$275,000
Annual Defined Contribution Limits  –  IRC § 415(c)(1)(A)$54,000$55,000
Individual Retirement Accounts (IRAs):                                          2017                             2018
IRA Contribution Limit$5,500$5,500
IRA Catch-up Contributions (age 50 and older)$1,000$1,000
Health Savings Accounts (H.S.A.s):   IRC § 223(b)(2)(A)                 2017                             2018
Maximum Annual Contribution – Individual Coverage$3,400$3,450
Maximum Annual Contribution – Family Coverage$6,750$6,850**
Catch-up Contribution – age 55 and over  – IRC § 223(b)(2)(A)$1,000$1,000
High Deductible Health Plan (HDHP):   IRC § 223(c)(2)(A)           2017                             2018
Minimum Annual Deductible – Individual Coverage$1,300$1,350
Minimum Annual Deductible – Family Coverage$2,600$2,700
Maximum Out-of-Pocket Expenses – Individual Coverage$6,550$6,650
Maximum Out-of-Pocket Expenses – Family Coverage$13,100$13,300
Non-HDHP Health Plans (Not H.S.A.-Compatible) (No minimum deductible)
Maximum Out-of-Pocket Expenses – Individual Coverage$7,150$7,350
Maximum Out-of-Pocket Expenses – Family Coverage$14,300$14,700
Dependent Care Assistance Plan (DCAP) & Health Flexible Spending Account (HFSA)
Maximum Annual Pre-tax Contribution through 125 Plan:      2017                             2018
DCAP if employee is married and filing a joint return or is a single parent filing as “House of Household”   –   IRC § 129$5,000$5,000
DCAP if employee is married but filing a separate return from spouse$2,500$2,500
HFSA, regardless of marital status$2,600$2,650
Qualified Transportation Benefits:      IRC § 132(f)                           2017                             2018
Parking – monthly maximum$255$260
Vanpooling & Transit – monthly maximum$255$260
Affordable Care Act Amounts                                                                2017                             2018
Annual 5000A(c) penalty for individual not having “minimum essential coverage” (MEC):  greater of dollar amount or a percentage of modified adjusted gross income (MAGI)  – file Form 8965 if a tax is due$695 or 2.5%$695 or 2.5%x
Annual 4980H(a) penalty for large employer not offering MEC to at least 95% of full-time employees.  Penalty amount is times total number of full-time employees minus 30$2,260$2,320
Annual 4980H(b) penalty for large employer not offering affordable minimum value coverage to all full-time employees.  Penalty amount is per each full-time employee who qualifies for a subsidy to buy insurance in the marketplace.$3,390$3,480

* $128,400 is the corrected, lower amount announced 11-27-17 for the SS maximum taxable wage base.  The original amount announced was $128,700.

**$6,850 is the corrected, lower amount announced 3-5-18 for the maximum H.S.A. contribution for family coverage. Internal Revenue Bulletin No. 2018–10, released March 5.  The original amount was $6,900.  The IRS recalculated the limit because the Tax Cuts and Jobs Act that was enacted at the end of 2017 applies the so-called chained consumer price index (chained CPI) to increases in HSA and a few other employee benefit contribution limits.

Many of the other 2018 dollar limits are in IRS Notice 2017-64  (retirement plan limits) at https://www.irs.gov/pub/irs-drop/n-17-64.pdf