2018 Plan and IRA Numbers Are Not Changed by TCJA Provisions

The IRS has begun the process of indicating which inflation adjusted numbers will or will not change due to revisions made in the Tax Cuts and Jobs Act.  In News Release IR-2018-19 the IRS has clarified that the qualified retirement plan and IRA amounts for 2018 originally announced in News Release IR-2017-177 and Notice 2017-64 will not require changes in amounts due to the Tax Cuts and Jobs Act.

Most of the numbers in that release were not at risk, since the inflation adjustment for the various numbers related to qualified plans are computed using procedures similar to those used to calculate cost of living adjustments under the Social Security Act.  The TCJA made no changes to that computation.

However, the various IRA amounts were potentially impacted by the change from CPI-U to the chained CPI (C-CPI-U) for tax rate indexing under the TCJA.  But, after running the numbers, the IRS found no change in the numbers was necessary.

As the release notes:

The tax law also specifies that contribution limits for IRAs, as well as the income thresholds related to IRAs and the saver’s credit, are to be adjusted for changes in the cost of living using procedures that are used to make cost-of-living adjustments that apply to many of the basic income tax parameters.

Although the new law made changes to how these cost of living adjustments are made, after taking the applicable rounding rules into account, the amounts for 2018 in the news release and the guidance remain unchanged.