The below presents the Internal Revenue Service (“IRS”) announced 2016 cost-of-living adjustments for retirement and health & welfare plans, and transportation programs. The cost-of-living index did not change significantly this year mainly due to the decline in the price of oil. Because of this, there were few changes to the 2016 limitations as compared to 2015.
Retirement Plan Limits
Notable 2016 annual retirement plan limitations as compared to 2015 are as follows:
2016 |
2015 |
|
401(k), 403(b) & 457(b) plan employee deferrals |
$ 18,000 |
$ 18,000 |
Employee age 50 catch-up contribution |
6,000 |
6,000 |
SIMPLE plan employee deferrals |
12,500 |
12,500 |
SIMPLE plan age 50 catch-up contribution |
3,000 |
3,000 |
IRA contribution limit (traditional and Roth) |
5,500 |
5,500 |
IRA age 50 catch-up contribution |
1,000 |
1,000 |
Defined contribution plan limit |
53,000 |
53,000 |
Defined benefit plan limit |
210,000 |
210,000 |
Annual compensation limit |
265,000 |
265,000 |
Highly compensated employee |
120,000 |
120,000 |
Key employee |
170,000 |
170,000 |
FICA taxable wage base |
118,500 |
118,500 |
Health and Welfare Plan Limits
The 2016 annual limitations as compared to 2015 are as follows:
2016 |
2015 |
|
Flexible Spending Accounts (FSA) |
$ 2,550 |
$ 2,550 |
HSA age 55 catch-up contribution |
1,000 |
1,000 |
Self-only Coverage: |
|
|
HSA contribution |
3,350 |
3,350 |
Minimum deductible for HDHP |
1,300 |
1,300 |
Maximum OOP expense limit for HDHP |
6,550 |
6,450 |
Family Coverage: |
|
|
HSA contribution |
6,750 |
6,650 |
Minimum deductible for HDHP |
2,600 |
2,600 |
Maximum OOP expense limit for HDHP |
13,100 |
12,900 |
HSA = Health Savings Account
HDHP = High Deductible Health Plan
OOP = Out-Of-Pocket
Qualified Transportation Fringe Benefit Limits
The 2016 monthly qualified transportation fringe benefit limitations as compared to 2015 are as follows:
2016 |
2015 |
|
Parking |
$ 255 |
$ 250 |
Transit |
130 |
130 |
Plan sponsors should update payroll and plan administration systems for the 2016 cost-of-living adjustments and should incorporate the new limits in relevant participant communications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.