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 your ORBA advisor or 312.670.7444.
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