By Erik D. Vogt

The IRS has announced the dollar limits for contributions and benefits in retirement and certain deferred compensation plans for 2016.  We have set out a chart summarizing the key limits below, including how they compare to those in prior years.

The key limits remain unchanged from 2015.  The limits did not change because the IRS determined that the increase in the cost-of-living index was insufficient to trigger an adjustment. 

In general, no plan document amendments should be required to reflect the 2016 limits. Plans generally incorporate cost-of-living adjustments by reference and, as mentioned above, the key limits have not changed.  However, plans that are established or restated in 2016, and SPDs that are required to be updated in 2016, should reflect the 2016 dollar amounts.

Summary of Key Dollar Limits for Employee Benefit Plans

 

New Limit for 2016

Prior Limit for 2015

2014

2013

2012

2009-2011

401(k), 403(b) and 457(b) Elective Deferrals

$18,000

$18,000

$17,500

 

$17,500

$17,000

$16,500

Age 50
Catch-Up Contributions

$6,000

$6,000

$5,500

$5,500

$5,500

$5,500

Annual Contributions to DC Plans

$53,000

$53,000

$52,000

$51,000

$50,000

$49,000

Annual Benefits from DB Plans

$210,000

$210,000

$210,000

$205,000

$200,000

$195,000

Annual Compensation Limit

$265,000

$265,000

$260,000

$255,000

$250,000

$245,000

Highly Compensated Employee (HCE)

$120,000

$120,000

$115,000

$115,000

$115,000

$110,000

Top Heavy Key Employee – Officer Test

$170,000

$170,000

$170,000

$165,000

$165,000

$160,000

Social Security Taxable Wage Base

$118,500

$118,500

$117,000

$113,700

$110,100

$106,800

ESOP Maximum Balance for 5-Year Payout

$1,070,000

$1,070,000

$1,050,000

$1,035,000

$1,015,000

$985,000

Amount Over Minimum Balance for Lengthening of 5-Year ESOP Payout Period

$210,000

$210,000

$210,000

$205,000

$200,000

$195,000

If you have any questions or would like assistance with any of the matters discussed in this Alert, contact any member of our Employee Benefits and Executive Compensation Practice Group.

Source: Client Alert