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Noteworthy COLA Adjustments for 2019

By Geoff Kayton, CPA 11.15.2018 | Client Alert

 

Here are some notable costs of living adjustments (COLA) issued by the IRS. All are effective January 1, 2019.

Social Security Benefit and Wage Cap Amounts

After years of insignificant increases, the Social Security and Supplemental Security Income (SSI) benefit increases by a healthy 2.8% and the Social Security wage cap will be $132,900.

Maximum Social Security Tax

For workers earning $132,900 or more in 2019:

  • employees to pay a total of $8,239.80;
  • employers to pay the same amount; and
  • self-employed workers to pay a total of $16,479.60

Additional Medicare Tax

Higher-income workers may have to pay an Additional Medicare tax of 0.9% on wages and self-employment income that exceed:

  • $250,000 — married filing jointly;
  • $125,000 — married filing separately; and
  • $200,000 — other taxpayers

 

Additional COLA Adjustments 2018 2019
Defined Benfit Plans
Lesser of the maximum dollar limitation for annual benefits or 100% of the participant's average compensation for his/her top 3 years
$220,000 $225,000
Defined Contribution Plan 415 Dollar Limit
Lesser of the dollar limitation for annual additions or 100% of compensation
 $55,000 $56,000
401(k)/403(b)/IRA/SIMPLE
All elective deferrals made to a 401(k), 403(b) tax deferred annuity, simplified employee pension, and SIMPLE retirement plan
 $18,500 $19,000
457 Deferral Limits
Lesser of the limitation on vested 457 contributions to 457 or 100% of includible compensation
 $18,500 $19,000
403(b) Catch-up Limit $21,500 $22,000
457 Catch-up Limit $37,000 $38,000
Age 50+ Catch-up Limit $6,000 No change
Definition of Key Employee $175,000 $180,000
Definition of Highly Compensated Employee $120,000 $125,000
Compensation Limit $275,000 $280,000
Compensation Limit for certain grandfathered government plan participants $405,000 $415,000
SIMPLE Accounts $12,500 $13,000
Minimum Compensation for Simplified Employee Pensions (SEPs) $600 No change

AGI at which Saver’s Credit starts to phase out

Joint

Single

Head of Household

 

$63,000

$31,500

$47,250

 

$64,000

$32,000

$48,000

 

If you have any questions, contact Geoff Kayton at 212.331.7525 | gkayton@berdonllp.com or your Berdon advisor.

Berdon LLP New York Accountants  

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