Autumn is here, which means leaves are changing color, football season is in full swing, and it’s time for government agencies to release new retirement plan limits for the upcoming year.
Some IRS Limits Go Up, Some Hold Steady
The IRS has issued Notice 2016-62 announcing cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017. The following limits are increasing:
- The maximum annual benefit under a defined benefit plan is increased from $210,000 to $215,000.
- The annual addition limit under a defined contribution plan is increased from $53,000 to $54,000.
- The maximum compensation that may be used in determining a qualified plan contribution is increased from $265,000 to $270,000.
These limits are unchanged for 2017:
- The salary deferral limit for 401(k) plans stays at $18,000 per calendar year.
- The catch-up contribution limit in 401(k) plans stays at $6,000 per year.
- The threshold for 2017 compensation for determining 2018 Highly Compensated Employees remains at $120,000.
- IRA contribution and catch-up limits remain at $5,500 and $1,000, respectively.
PBGC Premiums to Rise
The Pension Benefit Guaranty Corporation (PBGC) has announced the 2017 single-employer flat and variable premium rates:
- The flat-rate premium will rise from $64 to $69 per participant.
- The variable-rate premium will increase from $30 to $34 per $1,000 of unfunded liability.
- The per-participant cap on variable-rate premium will go up from $500 to $517. (Plans of small employers have a per-participant cap of $5 times the number of participants, which usually results in a cap much lower than $517.)
The change to the flat-rate premium was set by previous law. The increases to the variable-rate premium were set in part by previous law and partly were due to indexing. PBGC premiums have risen sharply in recent years, as discussed here and here.
Social Security Recipients Get Small Raise
As announced previously, retirees on Social Security will see a 0.3% increase in their benefits starting January 2017. The taxable wage base is rising from $118,500 to $127,300.