The IRS recently released its 2016 employee benefits limitations for retirement plans. The following chart lists common limitations relevant for many employers.
| 2016 | 2015 | 2014 | |
| 401(k), 403(b), 457(b), Pension, etc. | |||
| Annual Compensation | $265,000 | $265,000 | $260,000 |
| Elective Deferrals | 18,000 | 18,000 | 17,500 |
| Catch-up Contributions | 6,000 | 6,000 | 5,500 |
| Defined Contribution Limits | 53,000 | 53,000 | 52,000 |
| Defined Benefit Limits | 210,000 | 210,000 | 210,000 |
| HCE Threshold | 120,000 | 120,000 | 115,000 |
| Key Employee | 170,000 | 170,000 | 170,000 |
| ESOP Limits | 1,070,000 210,000 |
1,070,000 210,000 |
1,050,000 210,000 |
| IRA | |||
| IRA Contribution Limit | $5,500 | $5,500 | $5,500 |
| IRA Catch-Up Contributions | 1,000 | 1,000 | 1,000 |
| IRA AGI Deduction Phase-out Starting at | |||
| Joint Return | $98,000 | $98,000 | $96,000 |
| Single or Head of Household | 61,000 | 61,000 | 60,000 |
| SEP | |||
| SEP Minimum Compensation | $600 | $600 | $550 |
| SEP Maximum Contribution | 53,000 | 53,000 | 52,000 |
| SEP Maximum Compensation | 265,000 | 265,000 | 260,000 |
| SIMPLE Plans | |||
| SIMPLE Maximum Contributions | $12,500 | $12,500 | $12,000 |
| Catch-up Contributions | 3,000 | 3,000 | 2,500 |
| Other | |||
| 457 Elective Deferrals | $18,000 | $18,000 | $17,500 |
| Control Employee (board member or officer) | 105,000 | 105,000 | 105,000 |
| Control Employee (compensation-based) | 215,000 | 215,000 | 210,000 |
| Taxable Wage Base | 118,500 | 118,500 | 117,000 |
| Health Plans | |||
| Out-of-Pocket Maximums (Self-Only)1 2 | $6,850 | $6,600 | $6,350 |
| Out-of-Pocket Maximums (Other than Self-Only)1 2 | 13,700 | 13,200 | 12,700 |
| Transitional Reinsurance Fee (per Covered Life)3 | 27 | 44 | 63 |
| Health FSA Salary Reduction Cap4 | 2,550 | 2,550 | 2,500 |
| Employer Shared Responsibility - 4980H(a) Failure to Offer Coverage2 5 | 2,000 | 2,080 | 2,000 |
| Employer Shared Responsibility - 4980H(b) Failure to Offer Affordable, Minimum Value Coverage2 5 | 3,000 | 3,000 | 3,000 |
1These limits do not apply to grandfathered or retiree-only plans.
2These amounts are indexed to increase based on the average per capita premium for U.S. health insurance coverage from the prior calendar year. The Out-of-Pocket maximum limit for self-only coverage applies to all individuals (regardless of whether the individual is in self-only or another level of coverage). For example, a family plan with a $13,700 family Out-of-Pocket limit cannot have cost sharing exceeding $6,850 for an individual enrollee in the plan.
3These fees apply on a calendar year basis.
4These fees apply on a plan year basis and are indexed for CPI-U.
5These fees apply on a calendar year basis and are assessed monthly at 1/12 of the annual amount.
In addition, the Patient Protection and Affordable Care Act imposes a fee to help fund the Patient Centered Outcomes Research Institute (PCORI). For plans with years ending between Oct. 1, 2014, and Sept. 30, 2015, the PCORI fee is $2.08 per covered life. For plan years ending after Sept. 30, 2015, and before December 31, 2015, the PCORI fee is $2.17 per covered life. Future amounts will be subject to medical inflation.
If you have any questions about the key benefit plan limits for 2016, please contact Mary Jo Larson, April Goff, or any other member of the Warner Employee Benefits/Executive Compensation Practice Group.