The Internal Revenue Service announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2016 tax year. Highlights of limitations that changed for 2016 include a $1,000 increase to both the phase-out range for IRA contributors who are not covered by a workplace retirement plan and are married to someone who is covered and the range for taxpayers making contributions to a Roth IRA for married couples filing jointly from $183,000-$193,000 to $184,000-$194,000. The phase-out range for singles and heads of household making contributions to a Roth IRA was also increased by $1,000 from $116,00-$131,000 to $117,000-$132,000. On the other hand, the pension plan limitations listed below will not change because the increase in the cost-of-living index did not meet the statutory thresholds that prompt their adjustment.
2016 Pension Plan Limits that Remain Unchanged from 2015
Annual salary deferrals for 401(k) and 403(b) plans
$18,000
Age 50 catch-up contributions
$6,000
Maximum total annual contributions
$53,000
Maximum annual compensation
$265,000
Traditional and Roth IRA contributions
$5,500
Traditional and Roth IRA catch-up contributions
$1,000
SIMPLE 401(k) and IRA contribution limit
$12,500
Compensation dollar limit used to determine key employees in a top-heavy plan
$170,000
Compensation threshold for highly compensated employees “HCE”
You’ve heard our thoughts… We’d like to hear yours
The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.