IRS Updates U.S. Retirement Plan COLAs for 2017

November 1, 2016

On October 27, 2016, the IRS released its cost-of-living adjustments applicable to tax-qualified retirement plans for 2017.  For the second consecutive year, many of the key 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 current levels because increases in the cost-of-living index did not meet statutory thresholds that would trigger their adjustment.  This is despite the fact that there will be an increase of almost $9,000 in the Social Security wage base for 2017.

The key 2017 limits are as follows:


2017 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 (unchanged)

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 (unchanged)

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.)

$270,000 ($265,000 for 2016)

415(c) Limit on Annual Additions Under a Defined Contribution Plan

$54,000 (or, if less, 100% of compensation) ($53,000 for 2016)

415(b) Limit on Annual Age 65 Annuity Benefits Payable Under a Defined Benefit Plan

$215,000 (or, if less, 100% of average "high 3" compensation) ($210,000 for 2016)

414(q) Dollar Amount for Determining Highly Compensated Employee Status

$120,000 (unchanged)

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.)

$175,000 ($170,000 for 2016)

Social Security "Wage Base" for Plans Integrated with Social Security

$127,200 ($118,500 for 2016)


Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these issuesPlease contact the Gibson Dunn lawyer with whom you usually work, or any of the following:

Stephen W. Fackler – Palo Alto/New York (650-849-5385/212-351-2392, [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])
Allison Balick – Los Angeles (213-229-7685; [email protected])


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