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.

Author


Browse More Insights

Practice Group

Employee Benefits and Executive Compensation

Ogletree Deakins has one of the largest teams of employee benefits and executive compensation practitioners in the United States. As part of a firm that focuses on labor and employment law, our Employee Benefits Practice Group has a special ability to relate technical experience to the client’s “big picture” issues.

Learn more

Sign up to receive emails about new developments and upcoming programs.

Sign Up Now