IRS Announces 2016 Benefit Plan Limits and Thresholds

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Last week the Internal Revenue Service (IRS) announced the various 2016 dollar limitations for retirement plan contributions and other retirement-related items based on its annual cost-of-living analysis and adjustments, and there are very few changes from 2015. According to the IRS, it implemented so few changes because the cost-of-living index did not meet statutory thresholds that trigger any adjustment.

Accordingly, the elective deferral limit for 401(k), 403(b), most 457 plans, and the government’s Thrift Saving Plan remains at $18,000. Likewise, the catch-up contribution limit for employees ages 50 and older who participate in these plans remains unchanged at $6,000 annually, and the limit on an Individual Retirement Arrangement (IRA) also remains unchanged at $5,500, with the catch-up contribution limit remaining at $1,000.

The following chart summarizes the 2016 retirement plan limits and other benefit plans. The 2015 limits are provided for reference purposes.

	2015	2016
Elective Deferral Limit (401(k), 403(b), 457(b)	$18,000	$18,000
Catch-up Limit (age 509+)	$6,000	$6,000
Defined Benefit Limit	$210,000	$210,000
Defined Contribution Limit	$53,000	$53,000
Dollar Limit – Highly Compensated Employees	$120,000	$120,000
Officer-Key Employee	$170,000	$170,000
Annual Compensation Limit	$265,000	$265,000
SEP Eligibility Compensation Limit	$600	$600
SIMPLE Deferral Limit	$12,500	$12,500
SIMPLE Catch-up Limit (age 50+)	$3,000	$3,000
Social Security Taxable Wage Base	$118,500	$118,500
ESOP 5 Year Distribution Extension Account Minimum	$1,070,000	$1,070,000
Additional amount of 1 year extension	$210,000	$210,000
HSA (self/family) Maximum Annual Contribution	$3,350/$6,650	$3,350/$6,750
HDHP Minimum Deductible Limits	$1,300/$2,600	$1,300/$2,600
Out-of-pocket Expense Annual Maximum	$6,450/$12,900	$6,550/$13,100

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