October 2016 HR Alert | IRS Releases 2017 Retirement Plan Limits

HR Alert

October 2016


One of the most common compliance issues for employers and plan sponsors is failure to adhere to annual retirement plan limits. In order to avoid costly penalties and administratively burdensome correction procedures, plan sponsors must remain up-to-date with respect to applicable retirement plan limits. Today, October 27, 2016, the IRS announced cost-of-living adjustments affecting 2017 dollar limitations for retirement plans and other retirement-related items. Many of the 2017 limits remain unchanged from 2016. However, both the 2017 401(k) annual defined contribution limit and the annual compensation limit increased slightly. Below is a chart listing retirement plan (401(k) and non-401(k) plan) limits for the 2014-2017 plan years. Please note that the chart below does not include all applicable retirement plan limits, just some of the common ones.
401k Plan Limits
2017 2016 2015 2014
Elective Deferrals $18,000 $18,000 $18,000 $17,500
Catch-Up Contributions $6,000 $6,000 $6,000 $5,500
Annual Defined Contribution Limit $54,000 $53,000 $53,000 $52,000
Annual Compensation Limit $270,000 $265,000 $265,000 $260,000
Highly Compensated Employee $120,000 $120,000 $120,000 $115,000
Non-401k Related Limits
Defined Benefit Plans $215,000 $210,000 $210,000 $210,000
403(b)/457 Elective Deferrals $18,000 $18,000 $18,000 $17,500
SIMPLE Employee Deferrals $12,500 $12,500 $12,500 $12,000
SIMPLE Catch-Up Contribution $3,000 $3,000 $3,000 $2,500
SEP Annual Compensation Limit $270,000 $265,000 $265,000 $260,000
Social Security Wage Base $127,200 $118,500 $118,000 $117,000
Additional limitations that will change from 2016 to 2017 include:
  • 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 $186,000 and $196,000 (up from $184,000 and $194,000).
  • The AGI phased-out range for taxpayers making contributions to a ROTH IRA is $186,000 to $196,000 for married couples filing jointly (up from $184,000 and $194,000). For singles and heads of household, the income phase-out range is $118,000 to $133,000 (up from $117,000 to $132,000).
Hall Benefits Law, LLC recommends that you consult with ERISA legal counsel to assist you with any questions you may have regarding applicable limits for your retirement plans.
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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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