The IRS just released the 2016 retirement plan contribution limits, and these are numbers that should look awful familiar to HR pros.
This year, the U.S. Consumer Price Index didn’t trigger a cost-of-living adjustment (COLA) increase for the vast majority of plans, so the major plan limits will remain unchanged through 2016.
Make a note of these …
Here’s where the notable retirement plan limits stand for 2016:
- 401(k), 403(b) and 457 plan contributions remain at $18,000
- Catch-up contributions to 401(k), 403(b), 457(b) plans are limited to $6,000
- Catch-up contributions to SIMPLE 401(k) or regular SIMPLE plans are limited to $3,000
- The annual defined-contribution limit from all sources will stay at $53,000
- The employee compensation limit for calculating contributions to plans holds steady at $265,000
- The limit on annual IRA contributions remains capped at $5,500
- The IRA catch-up contribution limit (which is not tied to inflation) remains $1,000
- The limitation on the annual benefit under a defined-benefit plan will remain at $210,000
- The annual compensation limit for grandfathered participants in governmental plans which followed 401(a)(17) limits (with indexing) on July 1, 1993, is $120,000.
- The earning threshold used to define a highly compensated employee will remain at $120,000, and
- The earning threshold for a key employee in a top heavy plan (or “officer) will remain at $170,000.
The IRS also announced that the maximum amount employees can contribute to their FSAs in 2016 will remain unchanged from this year’s $2,550 limit. As we covered previously on HR Benefits Alert, the IRS released the 2016 HSA limits back in the spring.
What actually changed
Not all of the limits will remain unchanged in 2016. In the IRS announcement, the agency said the highlights of limitations that changed from 2015 to 2016 include the following:
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $184,000 and $194,000, up from $183,000 and $193,000.
- The AGI phase-out range for taxpayers making contributions to a Roth IRA is $184,000 to $194,000 for married couples filing jointly, up from $183,000 to $193,000. For singles and heads of household, the income phase-out range is $117,000 to $132,000, up from $116,000 to $131,000.
- The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,500 for married couples filing jointly, up from $61,000; $46,125 for heads of household, up from $45,750; and $30,750 for married individuals filing separately and for singles, up from $30,500.