Insights

IRS Announces 2018 Retirement Plan Limitations Not Affected by Tax Cuts and Jobs Act


On Feb. 6, 2018, the IRS announced in a news release (IR 2018-19) that the Tax Cuts and Jobs Act (i.e., the 2017 Tax Reform Law reported on in the Jan. 9, 2018, edition of Compliance Corner, or the TCJA) doesn't affect the tax year 2018 dollar limitations for retirement plans announced in IR 2017-177 and detailed in Notice 2017-64 (reported on in the Oct. 31, 2017, edition of Compliance Corner).

As background, the tax law provides dollar limitations on benefits and contributions under qualified retirement plans, and it requires the Treasury Department to annually adjust these limits for cost-of-living increases. Those adjustments are made using procedures that are similar to those used to adjust benefit amounts under the Social Security Act.

Since the TCJA made no changes to the section of the tax law limiting benefits and contributions for retirement plans, the qualified retirement plan limitations for tax year 2018 previously announced in IR 2017-177 and detailed in Notice 2017-64 remain unchanged.

The 2017 Tax Reform Law also specifies that contribution limits for IRAs, as well as the income thresholds related to IRAs and the saver's credit, are to be adjusted for changes in the cost of living using procedures that are used to make cost-of-living adjustments that apply to many of the basic income tax parameters.

Although the new law made changes to how these cost-of-living adjustments are made, after taking the applicable rounding rules into account, the amounts for 2018 remain unchanged.

IRS News Release »