Pension Plan Limitations Announced for the 2016 Tax Year
The Internal Revenue Service announced adjustments to the cost-of-living for the 2016 tax year that will affect dollar limitations for pension plans and other retirement-related taxes. In general, limitations will not change because the increase in the cost-of-living index did not meet statutory thresholds that trigger their adjustment.
For a detailed comparison of some of the pension plan limitations, please see the below table.
You can also visit the IRS website for more information: www.irs.gov
| Code Section | 2016 | 2015 |
| Elective deferral (contribution) limit under Code section 402(g) | $ 18,000 | $ 18,000 |
| Catch-up contribution limit under Code section 414(v)(2)(B)(i) | $ 6,000 | $ 6,000 |
| Annual compensation limit under Code section 401(a)(17) | $ 265,000 | $ 265,000 |
| Maximum defined benefit annuity limit under Code section 415(b)(1)(A) | $ 210,000 | $ 210,000 |
| Maximum defined contribution annual additions limit under Code section 415(c)(1)(A) | $ 53,000 | $ 53,000 |
| Highly compensated employee threshold under Code section 414(q)(1)(B) | $ 120,000 | $ 120,000 |
| Key employee threshold under Code section 416(i)(1)(A)(i) | $ 170,000 | $ 170,000 |
| Exclusion for elective deferrals under Code section 402(g)(3) | $ 18,000 | $ 18,000 |
| Annual compensation limit under Code section 401(a)(17), 404(l), 408(k)(3)(C),and 408(k)(6)(D)(ii) | $ 265,000 | $ 265,000 |
| Dollar limitation concerning the definition of key employee in a top-heavy plan under Code section 416(i)(l)(A)(i) | $ 170,000 | $ 170,000 |
| Allowed cost of living adjustments to the compensation limitation under Code section 401(a)(17) | $ 395,000 | $ 395,000 |
| Deferred compensation plans of state and local governments and tax-exempt organizations under Code section 457(e)(15) | $ 18,000 | $ 18,000 |
| Compensation amounts of the income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes under Code section 1.61-21(f)(5)(i) | $ 105,000 | $ 105,000 |
| Compensation regarding simplified employee pensions (SEPs) under Code section 408(k)(2)(C) | $ 600 | $ 600 |
| Limitation regarding SIMPLE retirement accounts under Code section 408(p)(2)(E) | $ 12,500 | $ 12,500 |
| Deductible amount for an individual making qualified retirement contributions under Code section 219(b)(5)(A) | $ 5,500 | $ 5,500 |