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CLIENT ALERT

November 10, 2016

2017 Employee Benefit Plan and Transportation Limits

By: Larry A. Ruff, CPA, MBA

The below presents the Internal Revenue Service (“IRS”) announced 2017 cost-of-living adjustments for retirement and health & welfare plans, and transportation programs.  Once again, the cost-of-living index did not change significantly this year.  This means there were few changes to the IRS 2017 limitations as compared to 2016.  The one significant change is to the FICA taxable wage base, which changes based on the average wage index.

Retirement Plan Limits

Notable 2017 annual retirement plan limitations as compared to 2016 are as follows:

 

2017

2016

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

54,000

53,000

Defined benefit plan limit

215,000

210,000

Annual compensation limit

270,000

265,000

Highly compensated employee

  120,000

  120,000

Key employee

  175,000

  170,000

FICA taxable wage base

127,200

118,500

Health and Welfare Plan Limits

The 2017 annual limitations as compared to 2016 are as follows:

 

2017

2016

Flexible Spending Accounts (FSA)

$ 2,600

$ 2,550

HSA age 55 catch-up contribution

1,000

1,000

Self-only Coverage:

 

 

HSA contribution

3,400

3,350

Minimum deductible for HDHP

1,300

1,300

Maximum OOP expense limit for HDHP

6,550

6,550

Family Coverage:

 

 

HSA contribution

6,750

6,750

Minimum deductible for HDHP

2,600

2,600

Maximum OOP expense limit for HDHP

13,100

13,100

HSA = Health Savings Account
HDHP = High Deductible Health Plan
OOP = Out-Of-Pocket

Qualified Transportation Fringe Benefit Limits

The 2017 monthly qualified transportation fringe benefit limitations as compared to 2016 are as follows:

  

2017

2016

Parking and transit                                            

   $   255

$     255

Bicycle

20

20

Plan sponsors should update payroll and plan administration systems for the 2017 cost-of-living adjustments and should incorporate the new limits in relevant employee and participant communications.

For further information about the new IRS employee plan limits, contact Larry Ruff at lruff@orba.com, or call him at 312.670.7444 for assistance.

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