The Internal Revenue Service (IRS) has announced various 2017 benefit plan limits and thresholds. There are increases from 2016 in some cases, but in other instances the 2016 amounts will continue to apply.
Benefit Plans
The following chart shows the major 2016 and 2017 benefit plan limits and thresholds. Increased amounts for 2017 are shown in boldface.
| Limit or Threshold | 2016 | 2017 |
| Maximum salary-reduction contribution for an individual to a 401(k) plan or a 403(b) plan or to most 457 plans | $18,000 | $18,000 |
| Maximum catch-up contribution for an individual age 50 or older, to a 401(k) plan or 403(b) plan or to most 457 plans | 6,000 | 6,000 |
| Maximum annual benefit under a qualified defined benefit plan | 210,000 | 215,000 |
| Maximum “annual addition” under a qualified defined contribution plan | 53,000 | 54,000 |
| Maximum compensation for an individual that can be taken into account under a qualified plan | 265,000 | 270,000 |
| Maximum compensation for an individual that can be taken into account under certain governmental plans | 395,000 | 400,000 |
| Minimum annual compensation for an individual to be treated as a “highly compensated employee” for the following year | 120,000 | 120,000 |
| Minimum annual compensation for an officer to be treated as a “key employee” as to a qualified plan | 170,000 | 175,000 |
| Dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period | 1,070,000 | 1,080,000 |
| Dollar amount used to determine the lengthening of the five-year distribution period under an employee stock ownership plan | 210,000 | 215,000 |
| Maximum salary-reduction contribution for an individual to a SIMPLE retirement plan | 12,500 | 12,500 |
| Maximum catch-up contribution for an individual age 50 or older to a SIMPLE retirement plan | 3,000 | 3,000 |
| Limit on voluntary employee salary-reduction contributions to a health flexible-spending arrangement under a cafeteria plan | 2,550 | 2,600 |
| Monthly limit on aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and for any transit pass | 255 | 255 |
| Monthly limit on aggregate fringe benefit exclusion amount for qualified parking | 255 | 255 |
| Maximum annual contribution for an individual with self-only coverage under a high-deductible health plan (HDHP) | 3,350 | 3,400 |
Individual Retirement Accounts (IRAs)
The following limits will apply to IRAs in 2017:
- The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals age 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
- The deduction for contributions to a traditional IRA is phased out for those who have modified adjusted gross incomes (AGI) within a certain range. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s 2017 AGI is between $186,000 and $196,000, up from $184,000 to $194,000 for 2016. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the 2017 AGI phase-out range is $99,000 to $119,000, up from $98,000 to $118,000 for 2016. For single individuals and heads of household who are covered by a workplace retirement plan, the AGI phase-out range is $62,000 to $72,000, up from $61,000 to $71,000 for 2016. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The AGI phase-out range for taxpayers making contributions to a Roth IRA in 2017 is $186,000 to $196,000 for married couples filing jointly, up from $184,000 to $194,000 for 2016. For single individuals and heads of household, the 2017 AGI phase-out range is $118,000 to $133,000, up from $117,000 to $132,000 for 2016.
Wage Base for Social Security Tax
In addition to the above adjustments, the Social Security Administration has announced that the wage base for Social Security taxes for 2017 will be $127,200. The 2016 wage base is $118,500.
For further information, please contact the author of this article, Larry R. Goldstein, or any other member of the McGuireWoods employee benefits team.