IRS Publishes 2019 Pension Plan Limitations

The IRS recently announced the cost-of-living adjustments applicable to certain dollar limitations for employee pension benefit plans for 2019. The resulting dollar limits are as follows:

• The annual benefit limit for defined benefit plans is increased from $220,000 to $225,000.


• The annual addition limit for defined contribution plans is increased from $55,000 to $56,000.


• The annual limit with respect to the exclusion for elective deferrals to a 401(k), 403(b) or 457 plan is increased from $18,500 to $19,000.


• The limit on annual contributions to an individual retirement arrangement (IRA) is increased from $5,500 to $6,000. The dollar limit for an additional catch-up contribution to an IRA for individuals age 50 or older remains unchanged at $1,000.


• The annual limit on compensation that can be taken into account under a qualified retirement plan is increased from $275,000 to $280,000.


• The dollar limit for determining key employees in a top-heavy plan is increased from $175,000 to $180,000.


• The dollar amount for determining the maximum account balance in an employee stock ownership plan (ESOP) subject to a five-year distribution period is increased from $1.105 million to $1.130 million. The dollar amount used to determine the lengthening of the five-year distribution period is increased from $220,000 to $225,000.


• The dollar limit for catch-up contributions for 401(k) plans for individuals age 50 or older remains unchanged at $6,000. In addition, the dollar limit under SIMPLE plans and SIMPLE IRAs for catch-up contributions for participants who are age 50 or older remains unchanged at $3,000.


• The limitation used in the definition of "highly compensated employee" is increased from $120,000 to $125,000.

A complete list of applicable pension plan limitations can be found here.

If you have any questions about the cost-of-living adjustments or any other employee benefits or executive compensation matter, please contact a member of Day Pitney's Employee Benefits and Executive Compensation practice group.