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.
Tracy L. Mounts is a paralegal in the Indianapolis office of Ogletree Deakins.
