The Internal Revenue Service (IRS) announced cost of living adjustments affecting 401(k) pension plans and other retirement-related items for tax year 2018 — including an increase in the amount employees can contribute to their 401(k) plans.
Some pension plan limitations, including those governing 401(k) plans, changed this year because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment.
Other limits remain unchanged because they did not meet the thresholds.
Highlights for 2018 include:
The IRS also updated its cost of living adjustment (COLA) charts for retirement plan contribution limits.
Employers may want to consider communicating these maximum contribution rates to employees. Retirement plan participants given access to professional advice are more likely to contribute the maximum amount than those without advice (45 percent to 36 percent), according to Natixis Global Asset Management’s 2016 Survey of Defined Contribution Plan Participants.
CalChamber can read more about the Employee Retirement Income Security Act (ERISA) in the HR Library. Not a member? See how CalChamber can help you.