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CLIENT ALERT

November 2, 2015

2016 Employee Benefit Plan and Transportation Limits

By: Larry A. Ruff, CPA, MBA

The below presents the Internal Revenue Service (“IRS”) announced 2016 cost-of-living adjustments for retirement and health & welfare plans, and transportation programs. The cost-of-living index did not change significantly this year mainly due to the decline in the price of oil.  Because of this, there were few changes to the 2016 limitations as compared to 2015.

Retirement Plan Limits

Notable 2016 annual retirement plan limitations as compared to 2015 are as follows:

 

2016

2015

401(k), 403(b) & 457(b) plan employee deferrals

 $ 18,000

$ 18,000

Employee age 50 catch-up contribution

6,000

6,000

SIMPLE plan employee deferrals

    12,500

12,500

SIMPLE plan age 50 catch-up contribution

      3,000

3,000

IRA contribution limit (traditional and Roth)

5,500

5,500

IRA age 50 catch-up contribution

1,000

1,000

Defined contribution plan limit

53,000

53,000

Defined benefit plan limit

210,000

210,000

Annual compensation limit

265,000

265,000

Highly compensated employee

  120,000

  120,000

Key employee

  170,000

  170,000

FICA taxable wage base

118,500

118,500

Health and Welfare Plan Limits

The 2016 annual limitations as compared to 2015 are as follows:

 

2016

2015

Flexible Spending Accounts (FSA)

$ 2,550

$ 2,550

HSA age 55 catch-up contribution

1,000

1,000

Self-only Coverage:

 

 

HSA contribution

3,350

3,350

Minimum deductible for HDHP

1,300

1,300

Maximum OOP expense limit for HDHP

6,550

6,450

Family Coverage:

 

 

HSA contribution

6,750

6,650

Minimum deductible for HDHP

2,600

2,600

Maximum OOP expense limit for HDHP

13,100

12,900

HSA = Health Savings Account
HDHP = High Deductible Health Plan
OOP = Out-Of-Pocket

Qualified Transportation Fringe Benefit Limits

The 2016 monthly qualified transportation fringe benefit limitations as compared to 2015 are as follows:

  

2016

2015

Parking                                             

   $   255

$     250

Transit

130

130

Plan sponsors should update payroll and plan administration systems for the 2016 cost-of-living adjustments and should incorporate the new limits in relevant participant communications.

For further information about the new IRS employee plan limits, contact Larry Ruff at lruff@orba.com, or call him at 312.670.7444 for assistance.

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