IRS Announces 2017 Retirement Plan Limitations

Today, the Internal Revenue Service announced cost-of-living adjustments affecting certain dollar limitations for pension plans and other retirement-related limitations for 2017, as detailed in Notice 2016-62.

The following chart details the 2017 retirement plan dollar limitation cost-of living adjustments:

Limitation Description 2016 2017
Maximum annual benefit under a defined benefit plan under IRC Section 415(b)(1)(A) $210,000 $215,000
Maximum annual contribution to an individual's defined contribution plan account under IRC Section 415(c) $53,000 $54,000
Maximum amount of annual compensation that may be taken into account for determining benefits or contributions to retirement plans under IRC Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) $265,000 $270,000
Wage Base For Social Security Tax $118,000 $127,200
Amount of compensation to be a "key" employee $170,000 $175,000
Dollar amount for determining maximum account balance in an employee stock ownership plan subject to a 5-year distribution period under IRC Section 409(o)(1)(C)(ii) $1,070,000 $1,080,000
Dollar amount used for determining the lengthening of the 5-year distribution period in an employee stock ownership plan under IRC Section 409(o)(1)(C)(ii) $210,000 $215,000

Notably, the following limits remain unadjusted for 2017:

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan remains $18,000.
  • The catch-up contribution limit for employees who are age 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA remains unadjusted at $5,500 and the additional catch-up contribution limit for individuals age 50 and over remains $1,000.
  • The limitation used in the definition of "highly compensated employee" under IRC Section 414(q)(1)(B) remains unchanged at $120,000.
  • The minimum compensation amount under IRC Section 408(k)(2)(C) for simplified employee pensions (SEPs) remains $600.
  • The limitation under IRC Section 408(p)(2)(E) for salary deferral contributions to SIMPLE retirement accounts remains unadjusted at $12,500.
  • The limitation under Section 664(g)(7) concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan remains $45,000.

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