What was the individual limit for defined benefits under Section 415 for 2018?

For the year 2018, the individual limit for defined benefits under Section 415 was set at $220,000. This limit pertains to the maximum annual benefit that can be paid from a defined benefit plan. These limits are adjusted periodically for inflation and are determined by the Internal Revenue Service (IRS).

Understanding Section 415 is critical, as it outlines how retirement plans can impose limits on benefits and contributions, ensuring that they remain within tax compliance. The specified amount reflects considerations around the average life expectancy and attempts to provide a reasonable level of benefits without incentivizing overly generous pension distributions that could create unfair tax advantages. This knowledge is essential for professionals managing retirement plans to ensure that the benefits administered remain compliant with IRS regulations while providing adequate retirement income for participants.