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Northwest OH Legal Blog

Friday, January 13, 2017

Internal Revenue Service Issues 2017 Cost-of-Living Adjustments for Retirement Plan Limits

On October 21, 2016, 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 2017.  The announcement includes the following highlights for 2017:

  • The elective deferral (contribution) limit for employees who participate in Code Section 401(k), 403(b), most 457 plans, and the federal government’s thrift savings plan remains unchanged from the limit in 2016, $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 2016, $6,000.
  • The annual benefit limitation for defined benefit plans under Code Section 415(b)(1)(A) increased by $5,000, from $210,000 in 2016 to $215,000 in 2017.
  • The annual addition limit for defined contribution plans under Code Section 415(c)(1)(A) increased by $1,000, from $53,000 in 2016 to $54,000 in 2017.

The following table sets forth the Code limits applicable to 401(k) plans, profit sharing plans, and defined benefit plans for 2017, with a comparison to such limits for 2016 and 2015.

Limits under Applicable Code Section

2017

2016

2015

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

270,000

265,000

266,000

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

18,000

18,000

18,000

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

6,000

6,000

6,000

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

54,000

53,000

53,000

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

120,000

120,000

120,000

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

215,000

210,000

210,000

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

175,000

170,000

170,000

Taxable Wage Base for Social Security Taxes

127,200

118,500

118,500


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