On October 27, 2016, the Internal Revenue Service issued Notice 2016-62 to announce 2017 inflation adjustments affecting pension plans and other retirement-related items. The following are among the more significant changes (and non-changes) for 2017:
- The elective deferral limit for employees who participate in 401(k), 403(b), and most 457 plans remains unchanged at $18,000.
- The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and certain 457 plans remains unchanged at $6,000.
- The limitation on the annual benefit under a defined benefit plan is increased from $210,000 to $215,000.
- The limitation on annual contributions to defined contribution plans is increased from $53,000 to $54,000.
- The limit on the amount of compensation that can be taken into account for purposes of numerous tests is increased from $265,000 to $270,000.
- The dollar limitation concerning the definition of key employee in a top-heavy plan is increased from $170,000 to $175,000.
- The limitation used in the definition of highly compensated employees remains unchanged at $120,000.
- The limitation on elective SIMPLE retirement account contributions remains unchanged at $12,500.
- The catch-up contribution limit for employees aged 50 and over who participate in a SIMPLE plan remains unchanged at $3,000.
- The deductible amount for an individual making contributions to an individual retirement account remains unchanged at $5,500. (This is before taking into account the additional contribution of $1,000 available to taxpayers who are at least 50 years of age; this amount remains unchanged.)
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.