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IRS Announces 2017 Retirement Plan Contribution Limits and Pension Plan Limitations

November 1, 2016 | Theresa McDowell

Theresa McDowell | Audit Partner

Theresa has more than 21 years of public accounting experience and leads the Employee Benefit Plan practice for the firm. She works exclusively with clients to bring their employee benefit plans into compliance with...

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The IRS released the cost-of-living indexed dollar limits for qualified retirement plans for 2017 and technical guidance in Notice 2016-62.  (Link opens new document in .pdf format.) Although much stays the same due to the current low inflation rate, there are small changes that help savers. Highlights of the changes for 2017 include:
  • Income ranges for determining eligibility to make contributions to traditional IRAs and Roth IRAs and to claim the saver’s credit increased.
  • Phase-out ranges for traditional IRA contribution deductions increased for single taxpayers (covered by a workplace retirement plan), married couples filing jointly (where the contributing spouse is covered by a workplace retirement plan), and IRS contributors not covered by a workplace retirement plan (but married to someone who is).
  • Income phase-out ranges for Roth IRA contributors increased for singles and heads of households and married couples filing jointly.
  • Income limits for the retirement savings contributions credit for low- and moderate-income workers increased for married couples filing jointly, heads of households, and for singles and married individuals filing separately.

Maximum Benefits and Contribution Limits for 2016 and 2017

Type

IRC Reference

2016 Limit

2017 Limit

401(k) and 403(b) Employee Deferral Limit1 402(g)(1) $18,000 $18,000
457 Employee Deferral Limit 457(e)(15) $18,000 $18,000
Catch-up Contributor2 414(v)(2)(B)(i) $6,000 $6,000
Defined Contribution Dollar Limit 415(c)(1)(A) $53,000 $54,000
Defined Benefit Dollar Limit 415(b)(1)(A) $210,000 $215,000
Compensation Limit3 401(a)(17); 404 (I) $265,000 $270,000
Highly Compensated Employee (HCE) Income Limit4 414(q)(1)(B) $120,000 $120,000
Key Employee Officer 416(i)(1)(A)(i) $170,000 $175,000
Social Security Taxable Wage Base   $118,500 $127,200
 

1 Employee deferrals to all 401(k) and 403(b) plans must be aggregated for purposes of this limit. A lower limit applies to SIMPLE plans.
2 Available to employees age 50 or older during the calendar year. A lower limit applies to SIMPLE plans.
3 All compensation from a simple employer (including all members of a controlled group) must be aggregated for purposes of this limit.
4 For the 2017 plan year, an employee who earns more than $120,000 in 2016 is an HCE. For the 2018 plan year, an employee who earns more than $120,000 in 2017 is an HCE.


To read the entire IRS announcement, please see IR-2016-141. (Link opens new document in .pdf format.) 

For more information about these and other retirement, pension, and employee benefit plan regulations, please contact Theresa McDowell at 303-740-9400 or tmcdowell@eksh.com.
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