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 your ORBA advisor or 312.670.7444.
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