Benefit Plan Update
As the 2018 year gets underway, I wanted to provide you a reminder in regards to your entities 401(k) pension plan. For those that have calendar year plans, now is the time that you or your third party administrator (TPA) will be conducting compliance testing on the 2017 activity. This is a very important step to ensure that the plan continues to meet IRS guidelines to keep favorable tax deduction advantages. It is important to make sure that your yearly census information gets compiled accurately, reviewed for completeness and is provided to your TPA timely.
The IRS announced earlier this year cost of living adjustments that will affect the dollar limitations for pension plans and other retirement-related items for 2018. Here are the highlights of changes for 2018:
Over this past year, we have seen an increase in the number of plans that are required to have an audit of their defined contribution pension plan. Reminder – once your plan has over 120 eligible participants at the beginning of a plan year, the plan is required by the Department of Labor to have an audit. This is a service that Gardiner Thomsen would be happy to handle for you. As always, if you have any questions about your defined contribution pension plan, please feel free to reach out to us.
- Contribution limit for employees who participate in 401(k), 403(b) and 457 plans has increased from $18,000 to $18,500.
- The dollar limitation on benefits and contributions under qualified retirement plans is increased from $54,000 to $55,000.
- The annual compensation limit has increased from $270,000 to $275,000.