2018 IRS Limit Updates Your Company Should be Aware Of

The last quarter of the year is often the busiest time for companies and their payroll departments. As you focus on meeting your 2017 goals, preparing for the new year ahead may be the last thing on your mind. However, the end of the year is an important time to pay attention to changes in payroll law that will affect your company in the near future. Future Systems has you covered with an overview of 2018 payroll limit changes your business needs to take into account.

Retirement Contribution & Savings Limits

Does your company offer contribution plans for employee retirement accounts? If so, take note of these 2018 IRS updates.

• The contribution limit for employees with 401(k), 403(b) and most 457 plans has increased from $18,000 to $18,500
• Catch-up contributions for 401(k), 403(b) and most 457 plans remain unchanged at $6,000
• SIMPLE retirement account and Catch-up limits remain unchanged at $12,500 and $3,000, respectively
• The Wage Base limit for OASDI (Social Security) has been raised to $128,400

For more detailed information on retirement limitations, please reference this IRS announcement.

Heath Spending & Saving Limits

As health care becomes an increasingly important issue for American families, it is essential to communicate changes to employees in a timely manner. While future health care legislation is still up in the air for the time being, the IRS has announced increased health spending and savings limitations for 2018 that employees may choose to take advantage of. 

If your company sponsors FSAs, you should inform employees that the Health Flexible Spending Arrangements (FSA) limit has been raised from $2,600 to $2,650. Remember, FSA contribution amounts can only be changed during open enrollment or with a change in employment or family status, so notify employees of FSA changes as soon as possible.

Health Savings Accounts (HSA) limits have also been raised from $3,400 to $3,450 for an individual and $6,750 to $6,900 for a family plan. It's important to share this information with employees that are enrolled in high-deductible health plans as it is a great opportunity to save for health expenses tax-free. 

Tax Bracket Updates

New tax reforms are currently going through Congress. Keep an eye out for information on new tax brackets and when they will take effect in the upcoming year.

These are just highlights of changes coming in 2018 that will affect most companies. For a full look at changes visit www.irs.gov/newsroom or give the Payroll Experts at Future Systems a call if you are looking for something in particular.