irs limits

IRS Announces Employee Benefit Plan Limits for 2018

OVERVIEW

Many employee benefits are subject to annual dollar limits that are periodically increased for inflation. The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the annual dollar limits for various welfare and retirement plan limits for 2018. Although some of the limits will remain the same, many of the limits will increase for 2018.

The annual limits for the following commonly offered employee benefits will increase for 2018:

  • High deductible health plans (HDHPs) and health savings accounts (HSAs);
  • Health flexible spending accounts (FSAs);
  • Transportation fringe benefit plans; and
  • 401(k) plans.

ACTION STEPS

Employers should update their benefit plan designs for the new limits and also make sure that their plan administration will be consistent with the new limits in 2018. Employers may also want to communicate the new benefit plan limits to employees in connection with annual open enrollment.

HSA and HDHP Limits

HSA Contribution Limit
Limit 2017 2018 Change
Self-only HDHP coverage $3,400 $3,450 Up $50
Family HDHP coverage $6,750 $6,900 Up $150
Catch-up contributions* $1,000 $1,000 No change

*Not adjusted for inflation

HDHP Limits
Limit 2017 2018 Change
Minimum deductible Self-only coverage $1,300 $1,350 Up $50
Family coverage $2,600 $2,700 Up $100
Maximum out-of-pocket Self-only coverage $6,550 $6,650 Up $100
Family coverage $13,100 $13,300 Up $200

FSA Benefits

FSA Limits
Limit 2017 2018 Change
Health FSA (limit on employees’ pre-tax contributions) $2,600 $2,650 Up $50
Dependent care FSA (tax exclusion)* $5,000 ($2,500 if married  and filing taxes separately) $5,000 ($2,500 if married and filing taxes separately) No change

*Not adjusted for inflation

Transportation Fringe Benefits

Transportation Benefits
Limit (monthly limits) 2017 2018 Change
Transit pass and vanpooling (combined) $255 $260 Up $5
Parking $255 $260 Up $5

Adoption Assistance Benefits

Adoption Benefits
Limit 2017 2018 Change
Tax exclusion (employer-provided assistance) $13,570 $13,840 Up $270

Qualified Small Employer HRA (QSEHRA)

QSEHRA
Limit 2017 2018 Change
Payments and Reimbursements Employee-only coverage $4,950 $5,050 Up $100
Family coverage $10,000 $10,250 Up $250

401(k) Contributions

401(k) Contributions
Limit 2017 2018 Change
Employee elective deferrals $18,000 $18,500 Up $500
Catch-up contributions $6,000 $6,000 No change

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