Compensation & Benefits Alert - November 2016

November 2016

IRS Releases Updated Cost of Living Adjustments for the 2017 Plan Year

Download PDF Version


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 

 
Carl Toppin
STS GES Senior Manager,
Compensation & Benefits 
  Ellyn Bess
STS GES Partner,
Compensation & Benefits

 
Kim Flett
Managing Director, Tax
Compensation & Benefits