Retirement Plan Limits

The IRS updated very few of the retirement plan limits effective for the plan year that begins on or after January 1, 2018. A comparison of the 2018 and 2017 limits is listed below.

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Social Security Tax and Wage Base

For calendar year 2018, the Social Security taxable wage base increases to $128,400 from $127,200 (as revised by the Social Security Administration on November 27, 2017).

Medicare Tax

The regular Medicare tax rate of 1.45% remains unchanged and applies to all income without a limitation for both the employee and employer portion. The Affordable Care Act additional Medicare tax of 0.9% remains unchanged. The additional Medicare tax applies to wages, other compensation, and self- employment income over certain dollar thresholds ($200,000 for single and $250,000 for married filing jointly). The additional Medicare tax only applies to the employee and not the employer. IRS regulations require an employer to withhold the additional Medicare tax on wages or compensation it pays to an employee in excess of $200,000 in a calendar year.

Health and Fringe Benefit Plan Limits

Updated health and fringe benefit plan adjustments also apply for the 2018 calendar year. A comparison of the 2018 and 2017 limits is listed below.

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* Special income tax situations may require a lower limit.