The Social Security Administration has reduced the maximum amount of earnings subject to Social Security tax for 2018 to $128,400 from $128,700.
The agency said the lower taxable maximum amount is due to corrected W-2s provided to Social Security in late October by a national payroll service provider.
The Internal Revenue Service uses the Social Security Administration’s taxable maximum to determine the taxable wage base for permitted disparity in defined contribution (DC) plan contributions. Permitted disparity allows for larger contributions or benefits with respect to compensation in excess of the Social Security wage base.The IRS issued Revenue Ruling 2017-22 November 14, which set the taxable wage base at $128,700. It is expected this will be amended following the Social Security Administration’s new announcement.
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