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Northwest OH Legal Blog

Monday, January 18, 2016

Internal Revenue Service Issues 2016 Cost-of-Living Adjustments for Retirement Plan Limits

On October 21, 2015, the Internal Revenue Service (“IRS”) announced cost-of-living adjustments to dollar limitations for items affecting tax-qualified retirement plans under the Internal Revenue Code (“Code”) in 2016.  The announcement includes the following highlights for 2016:

  • The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged from the limit in 2015, $18,000.
  • The catch-up contribution limit for the above listed plans for employees aged 50 and over also remains unchanged from the limit in 2015, $6,000.
  • The annual benefit limitation for defined benefit plans under Code Section 415(b)(1)(A) remains unchanged in 2016 at $210,000.
  • The annual addition limit for defined contribution plans under Code Section 415(c)(1)(A) remains unchanged in 2016 at 53,000.

The following table sets forth the Code limits applicable to 401(k) plans, profit sharing plans, and defined benefit plans for 2016, with a comparison to such limits for 2015 and 2014.

 

Limits under Applicable Code Section

2016

2015

2014

Annual Compensation - 401(a)(17)/404(l)

265,000

265,000

260,000

Elective Deferrals under 401(k) Plan - 402(g)(1)

18,000

18,000

17,500

Catch-Up Contributions under 401(k) Plan - 414(v)(2)(B)(i)

6,000

6,000

5,500

Annual Addition Limit for Defined Contribution Plans - 415(c)(1)(A)

53,000

53,000

52,000

Highly Compensated Employee Threshold - 414(q)(1)(B)

120,000

120,000

115,000

Annual Benefit Limit for Defined Benefit Plans - 415(b)(1)(A)

210,000

210,000

210,000

Key Employee Compensation Threshold - 416(i)(1)(A)(i)

170,000

170,000

170,000

Taxable Wage Base for Social Security Taxes

118,500

118,500

117,000


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