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IRS Publishes 2017 Pension Plan Limitations

Publisher: Day Pitney Alert
October 28, 2016

On October 27, the IRS announced the cost-of-living adjustments applicable to certain dollar limitations for employee pension benefit plans for 2017. The resulting dollar limits are as follows:

  • The annual benefit limit for defined benefit plans is increased from $210,000 to $215,000.
  • The annual addition limit for defined contribution plans is increased from $53,000 to $54,000.
  • The annual limit with respect to the exclusion for elective deferrals to a 401(k), 403(b) or 457 plan remains unchanged at $18,000.
  • The limit on annual contributions to an individual retirement arrangement (IRA) remains unchanged at $5,500. The dollar limit for an additional catch-up contribution to an IRA for individuals age 50 or older remains unchanged at $1,000.
  • The annual limit on compensation that can be taken into account under a qualified retirement plan is increased from $265,000 to $270,000.
  • The dollar limit for defining key employees in a top-heavy plan is increased from $170,000 to $175,000.
  • The dollar amount for determining the maximum account balance in an employee stock ownership plan (ESOP) subject to a five-year distribution period is increased from $1.07 million to $1.08 million. The dollar amount used to determine the lengthening of the five-year distribution period is increased from $210,000 to $215,000.
  • The dollar limit for catch-up contributions for 401(k) plans for individuals age 50 or older remains unchanged at $6,000. In addition, the dollar limit under SIMPLE plans and SIMPLE IRAs for catch-up contributions for participants who are age 50 or older remains unchanged at $3,000.
  • The limitation used in the definition of “highly compensated employee” remains unchanged at $120,000.

A complete list of applicable pension plan limitations can be found here.

If you have any questions about the cost-of-living adjustments or any other employee benefits or executive compensation matter, please contact a member of Day Pitney’s Employee Benefits and Executive Compensation practice group.


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