2016 Retirement Plan Benefit and Contribution Limits
On October 21, the Internal Revenue Service (IRS) announced benefit and contribution limits for employer-sponsored retirement plans for the 2016 tax year. The following chart summarizes the 2016 limits and includes the 2015 limits for comparison:
| Plans / Descriptions | 2015 | 2016 | Code Sections |
| 401(k) Pension Plan | |||
| Maximum annual compensation for calculating employer contributions | $265,000 | $265,000 | IRC §401(a)(17)/404(I) |
| Compensation limit for the definition of highly compensated employees | W-2 greater than $115,000 in 2014 | W-2 greater than $120,000 in 2015 | IRC §414(q)(1)(B) |
| Maximum annual additions (employer plus all employee contributions) | Lesser of total compensation or $53,000 | Lesser of total compensation or $53,000 | IRC§415(c) |
| Maximum amount of elective deferrals | $18,000 | $18,000 | IRC §402(g)(1) |
| Age 50 and over catch-up contributions | $6,000 | $6,000 | IRC §414(v) |
| FICA taxable wage base | $118,500 | $118,500 | n/a |
| Retirement Security (RS) Plan | |||
| Maximum annual compensation for calculating benefit accruals | $265,000 | $265,000 | IRC §401(a)(17)/404(I) |
| Maximum annual annuity (payable in life only form of benefit); Adjusted lower for other forms of benefit | $210,000 | $210,000 | IRC §415(b)(1)(A) |
| 457(b) Plans* (For tax-exempt co-op and governmental plans) | |||
| Maximum amount of elective deferrals and employer contributions | $18,000 | $18,000 | IRC §457(b)(2)/457(e)(15) |
| Special catch-up contributions (allowed in the three years prior to normal retirement age) | Lesser of
|
IRC §457(b)(3) | |
| Age 50 and over catch-up contributions (for governmental plans only) | $6,000 (only if not using special catch-up) | $6,000 (only if not using special catch-up) | IRC §414(v) |
*These typically include Executive Compensation 457(b) Plans, Global Executive Compensation Plans and Governmental Deferred Compensation 457(b) Plans. Co-ops and participants are encouraged to contact your tax adviser for more information.
Full details on the 2016 adjustments are available in the News & Events section of the IRS website (irs.gov). See IR-2015-118, IRS Announces 2016 Pension Plan Limitations. A chart of historical limits is also available on the IRS website.
The updated Retirement Benefit and Contribution Limits is now available on the Employee Benefits website. In December, a sample payroll deduction authorization form reflecting the 2016 limits will be available on the NRECA Employee Benefits website. We will let you know when that information is available through I&FS Weekly.
Information about the 401(k) Plan and RS Plan is available on Cooperative.com > My Benefits > Administration > Help & Resources > About NRECA Plans & Benefits. Contact your NRECA field representative with questions about the contribution limits or other plan features.
For questions about 457(b) Plans, contact the Deferred Compensation Program team at 703.907.6375 or deferredcomp@nreca.coop.