Today we will address some retirement plan dollar limits for 2016.
The IRS has announced the 2016 cost of living adjustments for retirement plans. All of the following are unchanged for 2016 since the increase in the cost-of-living index didn't meet the statutory thresholds that trigger their adjustment.
The limitation on the annual benefit under a defined benefit plan remained unchanged at $210,000.
The limit on the annual additions to a participant's defined contribution account remained unchanged at $53,000.
The maximum amount of annual compensation that can be taken into account for various qualified plan purposes remained unchanged at $265,000.
The limit on the exclusion for elective deferrals remained unchanged at $18,000. This limitation affects elective deferrals to Section 401(k) plans, Section 403(b) plans, and the Federal Government's Thrift Savings Plan. The limit on catch up contributions for those plans also remained unchanged at $6,000.
The maximum amount of compensation an employee may elect to defer for a SIMPLE plan remained unchanged at $12,500. The limit on catch up contributions for those plans remained unchanged at $3,000.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein