Annual Plan Limits

As the IRS makes changes to the annual qualified retirement plan limits and maximum contributions, EIP will keep you informed and help you determine if your plan still meets your objectives. Below are some of the current plan limits, as well as the numbers for the prior two years.

2019 2018 2017 2016
Max Defined Contribution $56,000 $55,000 $54,000 $53,000
Max Defined Benefit 225,000 220,000 215,000 210,000
Max Compensation 280,000 275,000 270,000 265,000
Max 401(k) Deferral 19,000 18,500 18,000 18,000
Catch-Up Contributions 6,000 6,000 6,000 6,000
Highly Compensated Employee 125,000 120,000 120,000 120,000
Social Security Tax Wage Base 132,900 128,400 127,200 118,500

Definitions:

The Max Defined Contribution is the maximum annual contribution amount that can be made to a participant’s account in a defined contribution plan such as a 401(k) plan or a profit sharing plan (Internal Revenue Code section 415).

The Max Defined Benefit is the maximum annual benefit that can be paid to a participant in a defined benefit pension plan (IRC section 415).

The Max Compensation is the maximum amount that can be used to calculate contribution allocations (IRC section 401(a)(17)).

The Max 401(k) Deferral is the maximum contribution that can be made on a pre-tax basis to a 401(k) plan (IRC section 402(g)(1)).

The Catch-Up Contributions are the amounts that individuals aged 50 or over can make in addition to the deferral limits under the Economic Growth and Tax Relief Act of 2001 (EGTRRA).

The Highly Compensated Employee amount is the minimum compensation level used for purposes of nondiscrimination testing. Anyone above the limit is considered highly compensated for testing purposes (IRC section 414(q)(1)(B)).

The Social Security Tax Wage Base can be used to provide a higher contribution allocation to employees above that level in certain types of integrated profit sharing plans.

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