Locke Lord QuickStudy: IRS Announces 2016 Retirement Plan Limitations – Most Limits Remain Unchanged
The Internal Revenue Service announced the 2016 cost-of-living adjustments to the dollar limitations for qualified retirement plans and other benefits, and the Social Security Administration announced its own cost-of-living adjustments for 2016. The elective deferral contribution limit for 401(k), 403(b) and 457(b) plans, as well as the catch-up contribution limit, remain unchanged from 2015. Other limits, such as the annual compensation limit under 401(a)(17), the limit used in the definition of highly compensated employee and the maximum annual contribution limit under Code Section 415, will not increase in 2016.
Retirement Plan Limits and Social Security Wage Base
| 2016 Limits | 2015 Limits | |
| 401(k)/403(b)/457(b) Elective Deferrals |
$18,000 | $18,000 |
| Catch-Up Contribution (plans other than SIMPLE plans) |
$6,000 | $6,000 |
| SIMPLE Plan Employee Deferrals |
$12,500 | $12,500 |
| SIMPLE Plan Catch-Up Contributions |
$3,000 | $3,000 |
| Plan Maximum Annual Contribution – Defined Contribution Plans (Section 415(c)) |
$53,000 | $53,000 |
| Maximum Annual Benefit – Defined Benefit Plans (Section 415(b)) |
$210,000 | $210,000 |
| Compensation Limit under Section 401(a)(17) |
$265,000 | $265,000 |
| Highly Compensated Employee Definition under Section 414(q) |
$120,000 | $120,000 |
| Key Employees Officer Compensation for Top-Heavy Plans |
$170,000 | $170,000 |
| Maximum ESOP Account Balance Subject to 5-Year Distribution Period | $1,070,000 | $1,070,00 |
| Social Security (FICA) Wage Base |
$118,500 | $118,500 |
Health Savings Account and High Deductible Health Plan Limits
Earlier this year, the IRS announced the inflation-adjusted amounts for health savings account and high-deductible health plans for 2016, which reflect an increase from 2015 for certain limits.
Health Savings Accounts/HDHP Limits| 2016 Limits | 2015 Limits | |
| HSA Contribution -- Annual Contribution Limit | ||
| Self-Only Coverage | $3,350 | $3,350 |
| Family Coverage | $6,750 | $6,650 |
| Catch-Up Contributions (age 55 or older) | $1,000 | $1,000 |
| High Deductible Health Plan - Minimum Annual Deductible | ||
| Self-Only Coverage | $1,300 | $1,300 |
| Family Coverage | $2,600 | $2,600 |
| High Deductible Health Plan – Maximum Out of Pocket Limit |
||
| Self-Only Coverage | $6,550 | $6,450 |
| Family Coverage | $13,100 | $12,900 |
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