Client Alerts Updated 2016 Employee Benefit Plan and Transportation Limits

Publication
01.11.16 | By: Larry A. Ruff

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 […]

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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 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 [email protected], or call him at 312.670.7444 for assistance.

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