IRS Releases Cost-of-Living Adjustments for Retirement Plans

The IRS recently announced the cost-of-living adjustments to dollar limitations for pension/retirement plans. Below are the adjustments amounts:

Elective Deferrals

• The annual elective deferral limit for 401(k) plans, 403(b) plans, 457(b) plans, SAR-SEPs, and the federal government’s Thrift Savings Plan increases from $15,500 to $16,500
• The annual elective deferral limit for SIMPLE plans is increased from $10,500 to $11,500

Employee “catch-up” contributions for individuals age 50 or older
The annual limit on additional catch-up contributions to 401(k), 403(b), and Section 457(b) plans is increased from $5,000 to $5,500

• The annual limit on additional catch-up contributions to a SIMPLE plan remains unchanged at $2,500

Other key figures
The dollar limit on annual additions to a defined contribution plan increases from $46,000 to $49,000

• The dollar limit on the annual benefit under a defined benefit plan increases from $185,000 to $195,000
• The annual compensation limit for qualified retirement plan purposes increases from $230,000 to $245,000
• The annual compensation amount used in the definition of a highly compensated employee increases from $105,000 to $110,000
• The annual compensation amount used in the definition of a key employee in a top-heavy plan increases from $150,000 to $160,000
• For purposes of determining a qualifying employee under a simplified employee pension (SEP) plan, the minimum amount of annual compensation is increased from $500 to $550

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