You can now officially let employees know how much money they can sock away for retirement next year.
COLA bump not triggered
The IRS just released the 2016 retirement plan contribution limits. Because the U.S. Consumer Price Index didn’t trigger COLA increases to most plans, the major plan limits will remain unchanged through 2016.
Here are major limits for 2016:
• 401(k), 403(b) and 457 plan contributions remain at $18,000
• Catch-up contributions to 401(k), 403(b), 457(b) plans are limited to $6,000
• The annual defined-contribution limit from all sources will stay at $53,000
• The employee compensation limit for calculating contributions to
plans holds steady at $265,000
• The limit on annual IRA contributions remains capped at $5,500
• The limitation on the annual benefit under a defined-benefit plan will
remain at $210,000, and
• The earning threshold used to define a highly compensated employee
will remain at $120,000.
For additional guidance, we recommend you contact your tax advisor.