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ID 113907733 © Stuart Miles |

New Retirement Plan and Benefit Limits for 2019

ID 113907733 © Stuart Miles | Dreamstime.comWant to create a multi-million dollar nest egg … in addition to the value of your business? This is possible by making sure you’re covered by a qualified retirement plan and maximizing contributions to it on your behalf. In addition, you’ll help employees save for their retirement. As you begin to plan for the coming year, take into account changes in the dollar limits for certain retirement plans as well as for certain employee benefits.

401(k) plans

If you offer, or expect to offer, this type of retirement plan in 2019, the maximum salary reduction contribution by an employee is $19,000 ($500 more than in 2018). For those who are going to be at least 50 years old by the end of 2019, they can add another $6,000 (this amount is unchanged from 2018). Factor these dollar amounts into your notice to employees of their rights about participation.

If you make matching contributions to your employees’ accounts, take their potentially higher contribution amounts into account.

Other retirement plans

For all types of retirement plans, including 401(k)s, the maximum amount of compensation you can take into account in figuring contributions and benefits is $280,000 (up from $275,000 in 2018).

Contribution and benefit limits for other types of retirement plans have been increased as follows:

  • Defined benefit (pension) plans. The maximum annual benefit is $225,000 ($5,000 more than in 2018).
  • Profit-sharing plans and SEPs. The limit for defined contribution plans, such as profit-sharing plans and SEPs in 2019 is $56,000 ($1,000 more than in 2018).
  • SIMPLE IRAs. The salary reduction contribution limit for 2019 is $13,000 ($400 more than in 2018). The catch-up contribution for employees who are age 50 or older by the end of the year remains unchanged at $3,000.
  • IRAs. The annual contribution limit for 2019 is $6,000 (it was $5,500 since 2013). The catch-up contribution for those 50 and older remains at $1,000.

Find information about your retirement plan choices in IRS Publication 3998. This publication does not reflect 2019 limits but covers other aspects of your plan choices.

Employee benefit plans

You may offer various types of fringe benefits. Some of the dollar amounts for these benefit plans are higher in 2019 than they were in 2018:

  • Health savings accounts (HSAs). If you contribute to your employees’ HSAs, the limits for 2019 are $3,500 for self-only coverage (up $50) and $7,000 for family coverage (up $100).
  • Medical flexible spending accounts (FSAs). The limit for 2019 is $2,700 (up from $50 from 2018).
  • Adoption assistance. The limit for 2019 is $14,080 (up from $13,810 from 2018).
  • Transportation fringe benefits. If you pay for free parking, monthly computer passes, or van pooling, the monthly limit for 2019 is $270 (up $5 per month from 2018). Remember that this type of fringe benefit is not tax deductible by the employer even though it is tax free to employees.

You can find a list of fringe benefits in IRS Publication 15-B. Again, this publication does not yet reflect 2019 limits but gives you an idea of the range of benefits you can offer.

Final thought

If you haven’t yet thought about offering some of these benefits, now may be a good time to consider it. One of the reasons why employees change jobs is for better benefits and perks, so increasing your offering is at least one good way to retain your workers. Factor in the new numbers for 2019 in crafting your benefits and perks offering.