The Internal Revenue Service has announced the 2019 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans, including deferred compensation plans that may be subject to Internal Revenue Code §409A. The amount by which the limits are adjusted each year is based on a cost of living index. Not all limits increase every year.

The Social Security (OASDI) taxable wage base, which governs the amount of pay subject to Social Security tax withholding and affects plans that are "integrated" with Social Security, also is subject to adjustment annually. For 2019, the OASDI taxable wage base has been increased to $132,900.

Adjusted Limits

Limits increased from 2018 in red
Provision 2019 Limit
Maximum 401(k) Contributions $19,000
Maximum Compensation Limit $280,000
Highly Compensated Employees
Earning (in previous year) more than
Key Employee Compensation Limit $180,000
Annual Contribution Limit for Defined Contribution Plans $56,000
Annual Benefit Limit for Defined Benefit Plans $225,000
SIMPLE Plan Limit $13,000
Age 50 and Older Catch-Up Contribution Limit
All plans other than SIMPLE Plans
Annual Contribution Limit for Section 457 Deferred Compensation Plans (government and tax-exempt organizations) $19,000
Maximum account balance subject to five-year distribution period
Each dollar amount of in excess of account balance that adds one year to distribution period
Simplified Employee Pension Plans (SEPs)
Contributions must be made for employees earning at least
409A Minimum Specified Employee (Officer) Compensation Requirement $180,000
409A Involuntary Separation Pay Exception $560,000

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.