IRS 2017 Plan Limits
On October 27, 2016, the IRS announced various limits and thresholds applicable to employee benefit plans for 2017. Section 415 of the Internal Revenue Code requires these limits to be adjusted annually due to cost-of-living increases. The majority of these limits remain unchanged from the 2016 limits, but there were increases in some instances. Earlier this year, the IRS also announced the 2017 inflation-adjusted limits for health savings accounts (“HSAs”), including the maximum annual HSA contribution, the minimum annual deductible for a high-deductible health plan (“HDHP”), and the maximum annual out-of-pocket expense for an HDHP.
The chart below depicts the applicable limits for 2016 and 2017, with increased amounts highlighted in boldface type.
Limit or Threshold
2017
2016
Maximum Elective Deferral Dollar Limit - Code §§402(g), 408(p), 457(e), and 414(v)
- 401(k)/403(b) Plan
$18,000
$18,000
- Simple 401(k) Plan
$12,500
$12,500
Maximum Catch-Up Contribution Dollar Limit - Code §414(v)
- 401(k)/403(b) Plan
$6,000
$6,000
- Simple 401(k) Plan
$3,000
$3,000
Maximum annual benefit under a qualified defined benefit plan
$215,000
$210,000
Annual Addition Dollar Limit on Contributions - Code §415(c)
$54,000
$53,000
Annual Dollar Limit on Includible Compensation - Code §401(a)(17)
$270,000
$265,000
Maximum compensation for an individual that can be taken into account under certain governmental plans
$400,000
$395,000
Highly Compensated Employee Dollar Threshold - Code §414(q)
$120,000
$120,000
Key Employee Dollar Thresholds - Code §416(i)
- Officer
$175,000
$170,000
- More than 1% Owner
$150,000
$150,000
HDHP Minimum Annual Deductible - Code §223(c)
Individual - $1,300
Family -$2,600
Individual - $1,300
Family - $2,600
HDHP Out-of-Pocket Maximum - Code §223(c)
Individual - $6,550
Family - $13,100
Individual - $6,550
Family - $13,100
HSA Maximum Contribution Limit - Code §223(b)
Individual - $3,400
Family - $6,750
Individual - $3,350
Family - $6,750
HSA Catch-Up Contribution Limit - Code §223(b)
$1,000
$1,000
Maximum Health FSA Salary Reductions - Code §125
$2,600
$2,550
Transportation Fringe Benefits (Parking, Transit Passes, and Vanpooling - Code §132(f)
$255/month
$255/month
Social Security Wage Base
The Social Security Administration also recently announced cost-of-living increases to the contribution and benefit base for 2017. For 2017, the maximum amount of wages subject to the 6.2% Social Security tax (old age, survivor, and disability insurance) will be $127,200. This is an increase of more than 7% from the 2016 maximum wage base of $118,500. This will result in taxpayers potentially paying a maximum Social Security tax of $7,886.40, an increase of $539.40 from the 2016 maximum Social Security tax of $7,347. The other portion of the FICA tax remains unchanged for 2017, for now (i.e., no maximum wage base, a tax rate of 1.45% for most earners, with an additional 0.9% on wages over $200,000 for single filers, wages over $250,000 for joint filers, and wages over $125,000 for persons who are married but filing separately).
PartnerErin Whitney Cicchetti is a partner in the Tax Department. Businesses, nonprofit organizations, and individuals rely on Erin to advise them on a variety of domestic, state, and international tax matters.
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