Facts & figures to Know for 2018

Many questions remain as Congress debates edits to tax reform legislation. While there are still unknowns, there are some figures we can start to consider in plans for 2018 and beyond. Below is a summary of certain announcements made by the Internal Revenue Service and other agencies related to 2018.

Employer Retirement Plan Savings

The salary deferral contribution limit for employees who participate in 401(k), 403(b) and most 457 plans is increased from $18,000 to $18,500. The additional catch-up contribution limit for employees aged 50 and over remains unchanged at $6,000 based on current law. The catch-up provision may be amended by pending legislation. The Senate tax reform proposal included some changes that would restrict catch-up contributions for certain high-income workers. Additionally, the catch-up amount may be increased to $9,000 but would no longer be made on a pretax basis, rather it would be allowable only as a Roth contribution after paying income taxes on the amount today.

Plan on $18,500 salary deferral for 2018 contributions. If you will be age 50 or older in 2018, be aware that the rules may be changing and watch for updates.


The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals age 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Discuss IRA or Roth IRA eligibility with your advisor and tax planner. Your total income impacts the ability to deduct an IRA contribution or make a Roth IRA contribution. Those age 70.5 and older can no longer make traditional IRA contributions, but may be eligible to contribute to a Roth IRA under certain circumstances. Consider a Roth IRA for a child with earned income as a way to build savings at a young age. You can start making IRA contributions for 2018 as soon as the new calendar year starts. You have until April 17th of 2018 to finalize a contribution for the 2017 tax year.


The annual exclusion for gifts increased to $15,000, an increase of $1,000 from the $14,000 exclusion for tax year 2017. Married couples can combine their exclusions, to give up to $30,000 to one person. There may be circumstances where gifts above the annual exclusion amount are prudent. In these cases, filing of a gift tax return is normally required. In most cases, no tax will be due at the time of the gift.

If you have a gifting strategy in place to children or other family members, the amount you can gift without filing a gift tax return is higher in 2018. For those funding 529 college savings plans, there are unique opportunities to contribute more than the annual exclusion. If you may want to gift more than the annual exclusion, discuss the potential impacts with you advisor. There are pros and cons to gifting different types of assets.

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