Payroll Planning

Payroll Planning

Prepare now for the following payroll changes that will take effect on January 1, 2019, and also consider some actions to take before year-end. Be aware that a few directives – including the federal mileage rate, and the State’s new minimum wage and Earned Sick Leave Act – will soon be finalized. Watch Yeo & Yeo’s website and future eAlerts for new developments.

Social Security Wage Base. The 2019 wage base will be $132,900. The employee and employer match will be 6.2%. The maximum deduction will be $8,239.80 ($132,900 x 6.2%).

Medicare Tax. As in prior years, there is no limit to the wages subject to the Medicare Tax; therefore, all covered wages are still subject to the 1.45% tax. Wages paid in excess of $200,000 will be subject to an extra 0.9% Medicare tax that will be withheld only from employees’ wages.

Dependent Care Limits. The maximum exclusion from gross income under a dependent care program is $5,000 for an individual or a married couple filing jointly.

Health Flexible Spending Arrangements. The dollar limitation on voluntary employee salary reductions for contributions to a health flexible spending arrangement (FSA) is $2,700.

Health Savings Accounts. HSAs are for eligible individuals in a high deductible health plan. The maximum annual contribution that can be made to an HSA in 2019:

Individual: $3,500
Family: $7,000

Catch-up contributions: Individuals 55 and older can make additional catch-up contributions to an HSA until they are enrolled in Medicare. The additional allowable contribution is $1,000.

IRA Contribution Limits. The 2019 contribution limit for Simple IRAs is $13,000. The catch-up contribution for those age 50 or older by December 31, 2019, is $3,000.

401(k), 403(b) and 457 Contribution Limits. The contribution limit for these plans’ employee deferrals is $19,000. The catch-up contribution for those age 50 or older by December 31, 2019, is $6,000.

For more information, view our 2019 Payroll Planning Brief.

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