IRS Announces Updates for Contribution Limits and Income Thresholds for Retirement Plans in 2018

Employees who participate in 401(k), 403(b) or 457(b) plans will be able to contribute up to $18,500 in 2018, up from $18,000 for 2017. This limit is aggregated to all plans, including pre-tax and Roth 401(k) contributions, but can also be lowered by the terms of the plan itself, such as a salary percentage cap. The additional catch-up pre-tax contribution limit available to employees over age 50 will remain unchanged at $6,000, which increases the total contribution limit from $18,500 to $24,500 for those employees.

Income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs) and Roth IRAs are all scheduled to increase in 2018.

The 2018 IRA contribution limit remains at $5,500, but an individual can still deduct contributions to a traditional IRA if they meet certain conditions. If, during the year, either the taxpayer or their spouse is covered by a retirement plan at work, the deductible contribution may be reduced or phased out until it is eliminated, depending on filing status and income. If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deductible contribution do not apply. The updated phase-out ranges for 2018 are:

  • Single and heads of household, $63,000 to $73,000; married filing separately, remains $0 to $10,000.
  • Married filing jointly covered by a workplace retirement plan, $101,000 to $121,000.
  • Married filing jointly not covered by a workplace retirement plan, $189,000 to $199,000.

The income phase-out ranges for taxpayers making contributions to a Roth IRA are:

  • Single and heads of household, $120,000 to $135,000.
  • Married couples filing jointly, $189,000 to $199,000.
  • Married individual filing a separate, remains $0 to $10,000.

Our tax professionals can assist you in determining your eligibility to make retirement plan contributions. Visit the Our Thoughts On Blog for more articles pertaining to retirement and tax planning.

For more information, contact Schneider Downs

our thoughts on

array(3) { [0]=> string(2) "50" [1]=> string(2) "34" [2]=> string(2) "59" }
Part One of a Series: An Introduction to IRS Publication 1075
What Happens if Your Tax Return is Lost in the Mail?
Good News Regarding Excess Business Losses For Your Pass-Through Construction Business
Transfer Pricing: A Reporting Requirement for Multinational Corporations
Relief from addition to tax for underpayment of estimated income tax for tax-exempt organizations that provide Qualified Transportation Fringe Benefits
IRS Guidance on Parking Expenses for Qualified Transportation Fringes Provides Opportunities for Exempt Organizations

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office

One PPG Place, Suite 1700
Pittsburgh, PA 15222
p:412.261.3644     f:412.261.4876

Map of Columbus Office

65 East State Street, Suite 2000
Columbus, OH 43215
p:614.621.4060     f:614.621.4062