2018 401(k) Contribution Limit
For 2018, the 401(k) Contribution Limit is $18,500 (Elective deferral) and +$6,000 (Age 50 catch-up).
Effective 2018-01-01Source: Notice 2017-64 (IRS)Verified 2026-09-01
Compared with 2017
| Item | 2017 | 2018 | Change |
|---|---|---|---|
| Elective deferral | $18,000 | $18,500 | +$500 (+2.8%) |
| Age 50 catch-up | +$6,000 | +$6,000 | +$0 (+0.0%) |
Who it applies to
Employees who participate in an employer-sponsored deferred compensation plan and are subject to the Internal Revenue Code's elective deferral limits.
What changed this year, and why
For 2018, the IRS increased the elective deferral limit for employer-sponsored deferred compensation plans. The new limit is $18,500, effective January 1, 2018. The catch-up contribution limit for participants aged 50 or older remains $6,000.
Common questions
- What is the elective deferral limit for 2018?
- The limit on elective deferrals under IRC Section 402(g) is $18,500 for 2018, effective January 1, 2018.
- Is there an additional contribution limit for older workers?
- Yes. Participants who are age 50 or older by the end of 2018 may make an additional catch-up contribution of $6,000.
What the limit counts, and the tax it does not save
An elective deferral is the portion of your compensation that your employer contributes to a retirement fund on your behalf, rather than paying it to you directly. For 2018, the overall cap on these deferrals is $18,500, unless you qualify for the age 50 catch-up provision, which permits an additional $6,000. Although a traditional elective deferral is excluded from your wages subject to federal income tax in the year it is contributed, it remains subject to social security and Medicare taxes. This means the deferral does not reduce the amount of wages on which those payroll taxes are calculated. The rule applies across all the plans that accept elective deferrals, including cash or deferred arrangements, the Thrift Savings Plan for federal employees, salary reduction simplified employee pensions, SIMPLE plans, tax-sheltered annuities, and section 457 plans. You are responsible for tracking the total amount you defer across every plan you participate in so that the combined total does not exceed the annual limit.
An elective deferral, other than a designated Roth contribution (dis- cussed later), isn't included in wages subject to income tax at the time contributed. However, it’s included in wages subject to social security and Medicare taxes.
Publication 525 (2018), Taxable and Nontaxable Income (IRS)
One limit across every plan you defer into
The IRS sets a single annual ceiling on the total amount any individual can defer across all retirement plans that accept elective contributions. For 2018, that overall limit is $18,500. If you participate in more than one plan - whether a cash or deferred arrangement, a Thrift Savings Plan, a salary reduction simplified employee pension, a SIMPLE plan, a tax-sheltered annuity, or a section 457 plan - all of your deferrals are added together and measured against this one cap. Amounts deferred under individual plan-specific limits still count toward the $18,500 overall limit. While your employer or plan administrator should apply the proper annual limit when calculating contributions, the responsibility for monitoring the combined total falls on you. If you are age 50 or older by the end of your tax year, you may also be eligible for an additional $6,000 in catch-up contributions on top of the $18,500 base.
Overall limit on deferrals. For 2018, in most cases, you shouldn't have deferred more than a total of $18,500 of contributions to the plans lis- ted in (1) through (3), earlier.
Publication 525 (2018), Taxable and Nontaxable Income (IRS)
The catch-up once you are old enough for it
If you reach age 50 or older by the end of your tax year, you may be eligible to make additional catch-up contributions beyond the standard annual limit. These catch-up contributions are extra elective deferrals that allow older workers to increase their retirement savings as they approach retirement age. For 2018, the additional catch-up amount is $6,000, which can be added on top of the regular $18,500 elective deferral limit. This provision recognizes that individuals in their fifties and beyond may need to accelerate their retirement savings. The catch-up contribution rules apply across the various retirement plans that accept elective deferrals, though specific plan types may have their own detailed requirements. For certain plans like section 403(b) arrangements, there are additional catch-up provisions for those with long service. You must meet the age requirement by the end of the tax year to qualify for these additional deferrals.
Catch-up contributions. You may be allowed catch-up contributions (additional elective de- ferrals) if you're age 50 or older by the end of your tax year.
Publication 525 (2018), Taxable and Nontaxable Income (IRS)
What happens if you defer more than the limit
If your elective deferrals exceed the annual limit, you must take corrective action. You are required to notify your plan by the date the plan specifies. If the plan permits it, the excess amount will be distributed back to you. When you participate in multiple plans, you can have the excess paid out from any of the plans that allow such distributions, but you must notify each plan by its required deadline about the amount to be paid from that particular plan. The plan must distribute the excess deferral to you, along with any income that amount earned, by April 15 of the year following the year of the deferral. You must include the excess deferral in your income for the year you made the deferral. If you fail to remove the excess by the deadline, you face double taxation: the excess is taxed once when contributed (because it remains in your income) and again when eventually distributed from the plan.
Excess deferrals. If your deferrals exceed the limit, you must notify your plan by the date re- quired by the plan. If the plan permits, the ex- cess amount will be distributed to you. If you participate in more than one plan, you can have the excess paid out of any of the plans that per- mit these distributions. You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. The plan then must pay you the amount of the ex- cess, along with any income earned on that amount, by April 15 of the following year. You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution.
Publication 525 (2018), Taxable and Nontaxable Income (IRS)
Roth deferrals count against the same limit
For 2018, designated Roth contributions to 401(k) plans are treated as elective deferrals but are included in the participant's wages for income tax purposes. These contributions are reported on Form W-2 in box 1, and the amount is identified using code AA in box 12 of the form. For 403(b) plans, the reporting uses code BB in box 12 instead. Despite the different tax treatment, Roth contributions count toward the same annual elective deferral limit that applies to all 401(k) deferrals. For participants age 50 or older, the catch-up contribution of $6,000 also applies to Roth deferrals, as they are treated as elective deferrals under the IRS rules. The base elective deferral limit for 2018 is $18,500, and Roth contributions are subject to this same cap.
Designated Roth contributions. These contributions are elective deferrals but are in- cluded in your wages in box 1 of Form W-2. Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12.
Publication 525 (2018), Taxable and Nontaxable Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2017-64 (IRS)
- Elective deferral
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) is increased from $18,000 to $18,500.
- Age 50 catch-up
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or § 408(p) for individuals aged 50 or over remains unchanged at $6,000.