On October 21, 2015, the IRS announced1 dollar limitations for pension plans and other retirement-related items for tax year 2016. IRC Section 415 requires these limits to be adjusted annually for any cost-of-living increases. However, the majority of pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. Most notably:
- Deferral limit for 401(k)/403(b) plans is $18,000
- Deferral limit for a SIMPLE 401(k) plan is $12,500
- Catch-up contribution limit for those age 50 and over, if permitted, is $6,000
- $3,000 for SIMPLE 401(k) plans
- Overall limit on contributions (including the total of elective deferrals, employer matching contributions, employer non-elective contributions, and allocations of forfeitures) cannot exceed the lesser of:
- 100% of the participant's compensation, or
- $53,000 ($59,000 including catch-up contributions)
For additional information, see: 2016 IRS Pension Plan Limits