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A Boost for the 401(k) Limit?

The official numbers are still about a month off, but benefits consultant Mercer has estimated what the benefit and contribution limits for 2018 might be.

Changes in those limits are based on the year-to-year increase in Q3 CPI-U (Consumer Price Index for All Urban Consumers), which Mercer says are projected to be 1.8%-1.9%, assuming recent inflation rates continue.

After applying the rounding rules of the Internal Revenue Code, Mercer estimates that some key limits will increase slightly from 2017, including:


  • 401(k), 403(b) & 457 plan elective deferrals would increase from $18,000 to $18,500.

  • 415(c) defined contribution maximum annual addition would increase from $54,000 to $55,000.

  • 415(b) defined benefit maximum annuity would increase from $215,000 to $220,000.


Additionally, the adjusted gross income levels at which employee contributions to a qualified plan or IRA qualify for the Saver’s Credit are also projected to increase.

Status, Quo

However, Mercer estimates that a number of limits would not be affected based on those assumptions, including:


  • The limit for the highly compensated employee income definition would remain at $120,000.

  • Catch-up contributions would remain at $6,000, while SIMPLE plan elective deferrals and catch-up contributions would remain at $12,500 and $3,000, respectively.

  • The key employee income definition would stay at $175,000.


We’ll see how these projections hold up in about a month.

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