November 2017 Breaking News – 401(k) Contribution Limit for 2018 Rises to $18,500

On October 19, the Internal Revenue Service announced that employee 401(k) contributions for 2018 will rise to $18,500, which is a $500 increase from 2017. It has been two years since an increase was implemented. Plan participants who contribute to the limit next year will be able to receive up to $36,500 from match and profit-sharing contributions ($55,000 minus $18,500). The “catch-up” contribution limit will stay at $6,000 for participants who are 50 and over.

HR and payroll managers should inform employees about the new limits in year-end open enrollment materials and make plans to adjust their HRIS for the new year. The employee 401(k) contribution increase reflects a consumer price index increase of 1.97 % between the third quarters of 2016 and 2017, which is the largest increase in the past six years.