On October 27, 2016, the Internal Revenue Service (IRS) announced the cost-of-living adjustments impacting tax-qualified pension plans for 2017. The increase in the cost-of-living index met the statutory thresholds that triggered adjustments in some of the general pension limitations, including the limit on annual compensation. However, the individual limits on elective deferrals and catch-up contributions will not change for 2017. The following table highlights some of the key limits that will continue to affect tax-qualified pension plans, including those that will increase for 2017:
|
Internal Revenue Code Section
|
2016
|
2017
|
|
401(a)(17) / 404(l)
Annual Compensation
|
$265,000
|
$270,000
|
|
402(g)(1)
Elective Deferrals
|
$18,000
|
$18,000
|
|
414(v)(2)(B)(i)
Catch-up Contributions
|
$6,000
|
$6,000
|
|
415(b)(1)(A)
Defined Benefit Plan Limits
|
$210,000
|
$215,000
|
|
415(c)(1)(A)
Defined Contribution Plan Limits
|
$53,000
|
$54,000
|
|
457(e)(15)
Deferral Limit
|
$18,000
|
$18,000
|
|
414(q)(1)(B)
Highly Compensated Employee Threshold
|
$120,000
|
$120,000
|
|
409(o)(1)(C)
ESOP Limits
|
$1,070,000
$210,000
|
$1,080,000
$215,000
|
|
416(i)(1)(A)(i)
Key Employee
|
$170,000
|
$175,000
|
|
408(p)(2)(E)
SIMPLE Maximum – Contributions
|
$12,500
|
$12,500
|
|
414(v)(2)(B)(ii)
SIMPLE Catch-up Contributions
|
$3,000
|
$3,000
|
|
408(k)(2)(C)
SEP Minimum – Compensation
|
$600
|
$600
|
|
408(k)(3)(C)
SEP Maximum – Compensation
|
$265,000
|
$270,000
|
|
1.61-21(f)(5)(i)
Control Employee
|
$105,000
|
$105,000
|
|
1.61-21(f)(5)(iii)
Control Employee
|
$215,000
|
$215,000
|
|
Social Security Taxable Wage Base
|
$118,500
|
$127,200
|
The complete IRS table of cost-of-living adjustments for retirement items can be found on the IRS’s website.
Catherine R. Reese is a shareholder in the Indianapolis office of Ogletree Deakins.
Tracy L. Mounts is a paralegal in the Indianapolis office of Ogletree Deakins.
