October 21, 2015
Earlier today, the IRS released its cost-of-living adjustments (COLAs) applicable to tax-qualified retirement plans for 2016. The vast majority of these limitations, including the elective deferral and catch-up contribution limits for employees who participate in 401(k), 403(b) and 457 tax qualified retirement plans, remain unchanged from 2015 levels because increases in the cost-of-living index did not meet statutory thresholds that would trigger their adjustment.
The key 2016 limits are as follows, all of which are unchanged from 2015 limits:
| Limitation | 2016 Limit |
| 402(g) Limit on Employee Elective Deferrals (Note: This is relevant for 401(k), 403(b) and 457 plans, and for certain limited purposes under Code Section 409A.) | $18,000 |
| 414(v) Limit on "Catch-Up Contributions" for Employees Age 50 and Older (Note: This is relevant for 401(k), 403(b) and 457 plans.) | $6,000 |
| 401(a)(17) Limit on Includible Compensation (Note: This applies to compensation taken into account in determining contributions or benefits under qualified plans. It also impacts the "two times/two years" exclusion from Code Section 409A coverage of payments made solely in connection with involuntary terminations of employment.) | $265,000 |
| 415(c) Limit on Annual Additions Under a Defined Contribution Plan | $53,000 (or, if less, 100% of compensation) |
| 415(b) Limit on Annual Age 65 Annuity Benefits Payable Under a Defined Benefit Plan | $210,000 (or, if less, 100% of average "high 3" compensation) |
| 414(q) Dollar Amount for Determining Highly Compensated Employee Status | $120,000 |
| 416(i) Officer Compensation Amount for "Top-Heavy" Determination (Note: Because Code Section 409A defines "specified employees" of public companies by reference to this provision, this amount also affects the specified employee determination, and thus, the group subject to the six-month delay under Code Section 409A.) | $170,000 |
| Social Security "Wage Base" for Plans Integrated with Social Security | $118,500 |
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, or the following:
Stephen W. Fackler – Palo Alto and New York (650-849-5385 and 212-351-2392, [email protected])
Michael J. Collins – Washington, D.C. (202-887-3551, [email protected])
Sean C. Feller – Los Angeles (310-551-8746, [email protected])
Krista Hanvey – Dallas (214-698-3425; [email protected])
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