On October 27, 2016, the IRS announced cost of living adjustments affecting dollar limitations for retirement plans for the 2017 tax year. Note some of these limits are affected by the Consumer Price Index (CPI) and did not meet the thresholds for being increased. Below is a quick summary of the changes that effect retirement plan sponsors.
For 2017, the limitations are as follows:
The elective deferral contribution limit for employees who participate in 401(k), 403(b) and most 457 plans remains unchanged at $18,000. The catch-up contribution for employees age 50 and over remains unchanged at $6,000.
The total contribution limit for defined contribution plans under Section 415(c)(1)(A) increased from $53,000 to $54,000.
The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) increased from $265,000 to $270,000.
The social security wage base increased from $118,500 to $127,200.