Compensation & Benefits Alert - November 2016
November 2016
IRS Releases Updated Cost of Living Adjustments for the 2017 Plan Year
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Summary
On October 27, 2016, the Internal Revenue Service (“IRS”) announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2017 tax year. The table below summarizes the updated IRS limits on benefits and compensation, the updated limits on certain welfare plans, and the updated taxable wage base for the FICA Social Security tax. The IRS issued technical guidance detailing these items in Notice 2016-62, Rev. Proc. 2016-55 and Rev. Proc. 2016-28.
| Retirement Plan Updated Limits |
| |
2017 |
2016 |
2015 |
2014 |
2013 |
| Maximum Elective Deferral 402(g)(1) for 401(k)/403b/457 Plans |
$18,000 |
$18,000 |
$18,000 |
$17,500 |
$17,500 |
| Catch-up Contributions 414(v)(2)(B)(i) for 401(k)/403b/457 Plans |
$6,000 |
$6,000 |
$6,000 |
$5,500 |
$5,500 |
Defined Contribution Plan
Annual Additions Limit 415(c)(1)(A) |
$54,000 |
$53,000 |
$53,000 |
$52,000 |
$51,000 |
Defined Benefit Plan
Annual Benefit Limit 415(b)(1)(A) |
$215,000 |
$210,000 |
$210,000 |
$210,000 |
$205,000 |
Qualified Plan
Compensation Limit 401(a)(17)/404(l) |
$270,000 |
$265,000 |
$265,000 |
$260,000 |
$255,000 |
| Highly Compensated Employees Compensation Test 414(q)(1)(B) |
$120,000 |
$120,000 |
$120,000 |
$115,000 |
$115,000 |
Top Heavy Key EE Definition
Officer Test 416(i)(1)(A)(i) |
$175,000 |
$170,000 |
$170,000 |
$170,000 |
$165,000 |
SIMPLE Plan
Maximum Contributions 408(p)(2)(E) |
$12,500 |
$12,500 |
$12,500 |
$12,000 |
$12,000 |
| SIMPLE Plan Catch-up Contributions 414(v)(2)(B)(ii) |
$3,000 |
$3,000 |
$3,000 |
$2,500 |
$2,500 |
| SEP Maximum Contribution 408(j) |
$54,000 |
$53,000 |
$53,000 |
$52,000 |
$51,000 |
| SEP Minimum Compensation 408(k)(2)(C) |
$600 |
$600 |
$600 |
$550 |
$550 |
| SEP Maximum Compensation 408(k)(3)(C) |
$270,000 |
$265,000 |
$265,000 |
$260,000 |
$255,000 |
| IRA Contribution Limit 219(b)(5)(A) |
$5,500 |
$5,500 |
$5,500 |
$5,500 |
$5,500 |
| IRA Catch-up Contributions 219(b)(5)(B) |
$1,000 |
$1,000 |
$1,000 |
$1,000 |
$1,000 |
| ESOP Limits 409(o)(1)(C)(ii) Five Year Distribution Threshold |
$1,080,000 |
$1,070,000 |
$1,070,000 |
$1,050,000 |
$1,035,000 |
| ESOP Limits 409(o)(1)(C)(ii) Additional Year Threshold |
$215,000 |
$210,000 |
$210,000 |
$210,000 |
$205,000 |
| Control Employee (board member or officer) 1.61-21(f)(5)(i) |
$105,000 |
$105,000 |
$105,000 |
$105,000 |
$100,000 |
| Control Employee (compensation-based) 1.61-21(f)(5)(iii) |
$215,000 |
$215,000 |
$215,000 |
$210,000 |
$205,000 |
| Welfare Plan Updated Limits |
| |
2017 |
2016 |
2015 |
2014 |
2013 |
| Flexible Spending Arrangement 125(i) |
$2,600 |
$2,550 |
$2,550 |
$2,500 |
$2,500 |
| Health Savings Account 223(b)(2)(A) |
$3,400 |
$3,350 |
$3,350 |
$3,300 |
$3,250 |
| Adoption Assistance Credit 137(a)(2) |
$13,570 |
$13,400 |
$13,400 |
$13,190 |
$12,970 |
| FICA Social Security Tax Updated Limit |
| |
2017 |
2016 |
2015 |
2014 |
2013 |
| Social Security Taxable Wage Base |
$127,200 |
$118,500 |
$118,500 |
$117,000 |
$113,700 |
| Social Security Insurance Rates |
6.20% |
6.20% |
6.20% |
6.20% |
6.20% |
| Medicare Insurance Rates |
1.45% |
1.45% |
1.45% |
1.45% |
1.45% |
| Additional Medicare Insurance Tax Rates for wages, compensation or self-employment income in excess of $250,000/$125,000/$200,000 depending on filing status |
0.90% |
0.90% |
0.90% |
0.90% |
0.90% |
For more information please contact one of the following practice leaders:
Joan Vines
Managing Director, National Tax Office
Compensation & Benefits |
|
Penny Wagnon
STS GES Managing Director,
Compensation & Benefits |
|
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Carl Toppin
STS GES Senior Manager,
Compensation & Benefits |
|
Ellyn Bess
STS GES Partner,
Compensation & Benefits |
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Kim Flett
Managing Director, Tax
Compensation & Benefits |
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