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
Hilary Atkins
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