Aon Washington Report
October 23, 2017
Senate Approves Budget Bill
On October 19, 2017, the Senate approved a fiscal 2018 budget (H. Con. Res. 71) with a 51–49 vote. The bill returns to the House for consideration. Currently, the federal government is being funded with temporary stopgap legislation which expires December 8, 2017.
The full text of H. Con. Res. 71 is available here.
IRS 2018 Official Indexed Figures for Retirement Plans and Other Employee Benefit Plans; 401(k) Contribution Limit Increases to $18,500 for 2018
The Internal Revenue Service (IRS) issued Information Release 2017-177 on October 19, 2017, providing the 2018 official indexed figures for retirement plans and other employee benefit plans. The IRS issued technical guidance detailing these items in Notice 2017-64. Following are the official limits of most interest to large and medium employers, as well as the official 2018 key employee pay thresholds for top-heavy plans.
- Section 402(g) annual dollar limit for pretax contributions to Section 401(k), 403(b), and 457 plans: $18,500 (up from 2017 limit of $18,000)
- Section 414(v) annual dollar limit on catch-up contributions for age 50 and over: $6,000 (unchanged from 2017)
- Section 414(q) pay threshold for highly compensated employees: $120,000 (unchanged from 2017)
- Section 415 limit for defined benefit plans: $220,000 (up from 2017 limit of $215,000)
- Section 415 limit for defined contribution plans: $55,000 (up from 2017 limit of $54,000)
- Section 401(a)(17) recognizable pay limit: $275,000 (up from 2017 limit of $270,000)
- Section 416 pay threshold for key employees in a top-heavy plan: $175,000 (unchanged from 2017)
IRS Information Release 2017-177 is available here.
IRS Notice 2017-64 is available here.
An Aon bulletin on the 2018 indexed figures (in PDF format) is available here and in the Aon Publications section of this report.
PBGC Announces 2018 Premium Rates for Single-Employer and Multiemployer Plans
On October 17, 2017, the Pension Benefit Guaranty Corporation (PBGC) announced the 2018 flat-rate premiums for single-employer and multiemployer plans. For the 2018 plan year, the per-participant flat-rate premium for single-employer plans is $74.00 (up from $69.00 in 2017) and $28.00 for multiemployer plans (no change from 2017). The variable-rate premium for single-employer plans for the 2018 plan year is 3.8% of unfunded liabilities (up from 3.4% in 2017).
For additional information on variable-rate premiums, current and historical data, and scheduled increases for years after 2018, please refer to the premium rate website.
The 2018 PBGC premium rates are available here.
PBGC Announces Launch of Pilot Mediation Project to Resolve Termination Liability Collection and Early Warning Program Cases
On October 16, 2017, the PBGC announced a new pilot program to offer mediation in certain Termination Liability Collection and Early Warning Program cases. PBGC’s Plan Sponsor Pilot Mediation Project will allow parties to resolve cases with the assistance of a skilled, neutral, and independent dispute resolution professional. The mediation project is part of the agency’s ongoing efforts to make it easier for sponsors to maintain their pension plans. “We want our customers to know we’re listening to them and we want to improve their experience in working with us,” stated PBGC Director Tom Reeder. “By providing an alternative dispute resolution option for employers who sponsor ongoing and terminated plans, we expect to save time and money for both the government and our stakeholders.”
The news release is available here.
The Plan Sponsor Pilot Mediation Project website is available here.
IRS Provides 2018 Inflation Adjustments and Maximum Contribution Limits for Employee Fringe Benefits
On October 19, 2017, the Internal Revenue Service (IRS) released Revenue Procedure 2017-58, which provides annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules, and other tax changes. Included in Revenue Procedure 2017-58 is the updated guidance for 2018 on the maximum contribution levels for a number of employee fringe benefits adjusted for cost-of-living expenses. These updated amounts include the following:
Adoption credit: For taxable years beginning in 2018, the credit allowed for an adoption of a child with special needs is $13,840 (up from the 2017 amount of $13,570). For taxable years beginning in 2018, the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,840 (up from the 2017 amount of $13,570). The available adoption credit begins to phase out for taxpayers with modified adjusted gross income in excess of $207,580 and is completely phased out for taxpayers with modified adjusted gross income of $247,580 or more. (Section 3.19 of Revenue Procedure 2017-58 details adjusted items relating to adoption assistance programs.)
Health FSA annual dollar limit: The annual dollar limit on employee contributions to employer-sponsored health care flexible spending arrangements (FSAs) for 2018 is $2,650 (up from the 2017 amount of $2,600).
Personal exemption: The personal exemption for 2018 is $4,150 (up from the 2017 amount of $4,050). However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $266,700 ($320,000 for married couples filing jointly). It phases out completely at $389,200 ($442,500 for married couples filing jointly).
Qualified transportation expenses under Code Section 132(f): The 2018 monthly limitation regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $260 (up from the 2017 amount of $255). The monthly limitation regarding the fringe benefit exclusion amount for qualified parking is $260 (up from the 2017 amount of $255).
IRS Revenue Procedure 2017-58 is available here
The related IRS news release is available here.
IRS 2018 Official Indexed Figures for Retirement Plans and Other Employee Benefit Plans
The Internal Revenue Service (IRS) issued Information Release 2017-177 on October 19, 2017, providing the 2018 official indexed figures for retirement plans and other employee benefit plans. The IRS issued technical guidance detailing these items in Notice 2017-64.
The Aon bulletin, which provides the official limits of most interest to large and medium employers, as well as the official 2018 key employee pay thresholds for top-heavy plans, is available here.
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