31 October 2016 IRS releases the qualified retirement plan limitations for year 2017 — 401(k) pretax limit unchanged at $18,000 The dollar limitations for qualified retirement and certain non-qualified plans that become effective January 1, 2017 were released by the IRS in Notice 2016-82. The dollar limitations that are adjusted by reference to Section 415(d) are modified annually for inflation and consequently, a number of them are changed for 2017. Despite the adjustments in many of the other dollar limitations, the 2017 pretax limit that applies to elective deferrals to 401(k), 403(b) and most 457(b) plans is unchanged at $18,000, the same limit that applied in 2015 and 2016. The dollar limitation for catch-up contributions for participants age 50 or over is also unchanged at $6,000. Plan participants in qualified retirement plans will need to consider the impact of the 2017 dollar limitations in their overall financial planning. Below are some of the cost-of-living adjustments applicable to dollar limitations for qualified retirement plans and other items for 2017. Qualified retirement plan limitations (2016 vs. 2017) Description | 2016 Limit | 2017 Limit | Participant pretax contribution limit for 401(k) and 403(b) plans Section 402(g)(1) | $18,000 | $18,000 | Deferral limit for deferred compensation plans of state and local governments and tax-exempts Section 457(e)(15) | $18,000 | $18,000 | Dollar Limitation for Catch-Up Contributions for Participants Age 50 or over in 401(k), 403(b), governmental 457 plans and SEPs Section 414(v)(2)(B)(i) | $6,000 | $6,000 | Dollar Limitation for Catch-Up for Participants Age 50 or over Contributions to a SIMPLE IRA or a SIMPLE 401(k) Section 414(v)(2)(B)(ii) | $3,000 | $3,000 | Defined Benefit Plan Limit1 Section 415(b)(1)(A) | Lesser of $210,000 or 100% of the participant's 3 year high compensation | Lesser of $215,000 or 100% of the participant's 3 year high compensation | Defined Contribution Plan Limit Section 415(c)(1)(A) | Lesser of $53,000 or 100% of participant's compensation | Lesser of $54,000 or 100% of participant's compensation | Maximum ESOP account balance subject to a 5-year distribution period/increments for additional year Section 409(o)(1)(C)(ii) | $1,070,000/$210,000 | $1,080,000/$215,000 | Highly Compensated Employee dollar threshold Section 414(q)(1)(B) | $120,000 | $120,000 | Definition of Key Employee in a Top-Heavy Plan — officer compensation threshold Section 416(i)(1)(A)(i) | $170,000 | $175,000 | Annual limit on includible compensation for benefits and allocations2 Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) | $265,000 | $270,000 | SEP employee participation floor Section 408(k)(2)(C) | $600 | $600 | Simple Retirement Accounts contribution limit Section 408(p)(2)(E) | $12,500 | $12,500 | Compensation amount of control employees for fringe benefit valuation purposes Treas. Reg. Section 1.61-21(f)(5)(i) and (iii) | $105,000/$215,000 | $105,000/$215,000 |
Contact Information
For additional information concerning this Alert, please contact:
| Employment Tax Services Group | | • Debera Salam | (713) 750-1591 | | • Kenneth Hausser | (732) 516-4558 |
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Other Contacts| Employment Tax Services Group | | • Gregory Carver | (214) 969-8377 | | • Richard Ferrari | (212) 773-5714 | | • Kristie Lowery | (704) 331-1884 | | • Christina Peters | (614) 232-7112 | | • Debbie Spyker | (720) 931-4321 |
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1 For a participant who separated from service before January 1, 2017, the participant's limitation under a defined benefit plan under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2016, by 1.0112. 2 For eligible participants in certain governmental plans that allow cost of living adjustments to the compensation limit to be taken into account, such limit is unchanged at $400,000. Document ID: 2016-1846 |
