Annual Contribution Limits
Salary reduction contributions
The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed $12,500 in 2015 – 2018.
If an employee participates in any other employer plan during the year and has elective salary reductions under those plans, the total amount of the salary reduction contributions that an employee can make to all the plans he or she participates in is limited to $18,500 in 2018 ($18,000 in 2015 – 2017). See more than one plan.
- Catch-up contributions. If permitted by the SIMPLE IRA plan, participants who are age 50 or over at the end of the calendar year can also make catch-up contributions. The catch-up contribution limit for SIMPLE IRA plans is $3,000 in 2015 – 2018.
Employer matching contributions
The employer is generally required to match each employee’s salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee’s compensation. This requirement does not apply if the employer makes non-elective contributions instead.
- Lower percentage. An employer may choose to make a matching contribution less than 3%, but it must be at least 1% and for no more than 2 out of 5 years. See Notice 98-4 for more information. The employer must notify the employees of the lower match within a reasonable period before the 60-day election period for the calendar year.
Contributions an employer can make to an employee’s SEP-IRA cannot exceed the lesser of:
- 25% of the employee’s compensation, or
- $55,000 for 2018 ($54,000 for 2017)
Note: Elective salary deferrals and catch-up contributions are not permitted in SEP plans.
You may be able to contribute to a Coverdell ESA to finance the beneficiary’s qualified education expenses. Contributions must be made in cash, and they’re not deductible. Any individual whose modified adjusted gross income is under the limit set for a given tax year can make contributions. Organizations, such as corporations and trusts can also contribute regardless of their adjusted gross income. Contributors must contribute by the due date of their tax return (not including extensions). There’s no limit to the number of accounts that can be established for a particular beneficiary; however, the total contribution to all accounts on behalf of a beneficiary in any year can’t exceed $2,000.
The Internal Revenue Service has announced the 2018 HSA contribution limits. The new single coverage contribution limit is $3,450 (up from $3,400 in 2017).
NOTE: On March 5, 2018, the IRS announced that the 2018 annual HSA contribution limit for those with family HDHP coverage will drop from $6,900 (a originally set) to $6,850, effective immediately. (It was $6,750 in 2017)
On March 5, 2018, the Internal Revenue Service (IRS) released Rev. Proc. 2018-18, which changes the family limit on annual contributions to Health Savings Accounts (HSAs). The Revenue Procedure announced that the HSA limit for families is reduced by $50 to $6,850 for the 2018 calendar year. Last year the IRS set the 2018 HSA limit for families at $6,900, with the limit for individuals set at $3,450. The limit for individuals remains the same.
The new limit of $6,850 is retroactive back to January 1, 2018. This means that some families may have already contributed $6,900 to their HSAs for the year, exceeding the new limit by $50.
.27 Medical Savings Accounts.
(1) Self-only coverage. For taxable years beginning in 2018, the term “high deductible health plan” as defined in § 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,300 and not more than $3,450, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,550.
(2) Family coverage. For taxable years beginning in 2018, the term “high deductible health plan” means, for family coverage, a health plan that has an annual deductible that is not less than $4,550 and not more than $6,850, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,400.
Information in this section was updated 3/14/18
Employee contribution limitations increased from $18,000 to $18,500 for 2018. The additional catch-up contribution for those 50 and older stays the same at $6,000. The annual maximum 401(k) (defined contribution) total contribution amount increased from $54,000 to $55,000 ($61,000 for those 50 and older).
For 2015, 2016, 2017 and 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than:
- $5,500 ($6,500 if you’re age 50 or older), or
- your taxable compensation for the year, if your compensation was less than this dollar limit.
The IRA contribution limit does not apply to:
- Rollover contributions
- Qualified reservist repayments
- Claiming a tax deduction for you IRA contribution
- Roth IRA contribution limitations based on filing status and income
- IRA contributions after age 70 ½
- Spousal IRAs