2016 Pension Plan Limitations


By Jenna Zelenski

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”   $120,00

Contact us for questions regarding the 2016 pension plan dollar limitations and visit our ERISA Industry Group page to learn about services that we can offer in regards to your company's benefit plans.

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.

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