On October 21, 2015, the Internal Revenue Service (IRS) announced the cost-of-living adjustments impacting tax-qualified pension plans for 2016. The increase in the cost-of-living index did not meet the statutory thresholds that trigger adjustments. As a result, most of the general pension limitations, including the individual limits on deferrals and catch-up contributions, as well as the limit on annual compensation, will not change for 2016. The following table highlights some of the key limits that will continue to affect tax-qualified pension plans:
|
Internal Revenue Code
Section
|
2015 and 2016
|
|
401(a)(17) / 404(l)
Annual Compensation
|
$265,000
|
|
402(g)(1)
Elective Deferrals
|
$18,000
|
|
414(v)(2)(B)(i)
Catch-up Contributions
|
$6,000
|
|
415(b)(1)(A)
Defined Benefit Plan Limits
|
$210,000
|
|
415(c)(1)(A)
Defined Contribution Plan Limits
|
$53,000
|
|
457(e)(15)
Deferral Limit
|
$18,000
|
|
414(q)(1)(B)
Highly Compensated Employee Threshold
|
$120,000
|
|
409(o)(1)(C)
ESOP Limits
|
$1,070,000
$210,000
|
|
416(i)(1)(A)(i)
Key Employee
|
$170,000
|
|
408(p)(2)(E)
SIMPLE Maximum – Contributions
|
$12,500
|
|
414(v)(2)(B)(ii)
SIMPLE Catch-up Contributions
|
$3,000
|
|
408(k)(2)(C)
SEP Minimum – Compensation
|
$600
|
|
408(k)(3)(C)
SEP Maximum – Compensation
|
$265,000
|
|
1.61-21(f)(5)(i)
Control Employee
|
$105,000
|
|
1.61-21(f)(5)(iii)
Control Employee
|
$215,000
|
|
Social Security Taxable Wage Base
|
$118,500
|
The complete IRS table of cost-of-living adjustments for retirement items can be found on the IRS’s website.
