Retirement Plan Limits for 2018 After Tax Reform

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Prior to enactment of the Tax Cuts and Jobs Act (TCJA), the Internal Revenue Service published cost-of-living adjustments to various qualified retirement plans and related amounts for 2018 in News Release IR 2017-177 and Notice 2017-64.

Recently, the Internal Revenue Service issued News Release 2018-19, clarifying that the TCJA does not affect these adjustments because it made no changes to the section of the Internal Revenue Code that limits benefits and contributions for retirement plans.

However, the TCJA does require the use of a slower methodology (known as C-CPI-U) to index contribution limits for Individual Retirement Arrangements (IRAs), as well as the income thresholds for IRAs and the Section 25B saver’s credit. Despite this, the Internal Revenue Service has determined that the amounts previously announced for these items remain unchanged after taking into account applicable rounding rules.

Questions and comments may be directed to Bob Grossman or Don Johnston at 412-338-9300.