The IRS announces savings adjustments

The IRS annually adjusts the maximum amounts that employees can save in their 401(k) plans. This chart (borrowed from SHRM) shows the defined contribution plan changes.

Defined Contribution Plan Limits 2019 2018 Change
Maximum employee elective deferral* $19,000 $18,500 +$500
Employee catch-up contribution (if age 50 or older by year-end)** $6,000 $6,000 No
Defined contribution maximum limit, all sources $56,000 $55,000 +$1,000
Defined contribution maximum limit (if age 50 or older by year end); maximum contribution all sources plus catch-up $62,000 $61,000 +$1,000
Employee compensation limit for calculating contributions $280,000 $275,000 +$5,000
Key employees’ compensation threshold for nondiscrimination testing $180,000 $175,000 +5,000
Highly compensated employees’ threshold for nondiscrimination testing $125,000 $120,000 +5,000

According to Investopedia:
For 2019, the maximum allowable contribution to a 401(k) account – including employee salary deferrals and after-tax Roth contributions, as well as employer matching and elective contributions – is $56,000, or 100% of employee compensation, whichever is lower. This is up $1,000 from 2018. With a $6,000 catch-up contribution, the maximum yearly contribution for 401(k) participants age 50 or older is $62,000 for 2019 (up by $1,000 from 2018).
It is important to communicate this information to your employees.

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