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CLIENT ALERT

January 11, 2016

Updated 2016 Employee Benefit Plan and Transportation Limits

The below presents the Internal Revenue Service (IRS) announced 2016 cost-of-living adjustments for retirement and health & welfare plans, and transportation programs.  This table has been updated to reflect the recently revised Qualified Transportation Fringe Benefit limits for 2015 and 2016. 

The Protecting Americans from Tax Hikes (PATH) Act of 2015 was signed into law on December 18, 2015, which provided for parity between qualified parking and transit benefits.  Monthly qualified bicycle benefits have also been included on the below as part of the PATH Act.  No other changes have been made to the below limits.

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

255

250

Bicycle

 
20 20

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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