Annual Plan Limits

ERISA requires all qualified retirement plans to limit the amount of annual contributions or benefits. See the chart and details below to learn more about how much can be funded to different types of qualified retirement plans.

Download PDF of 2017 Plan Limits 

Retirement Plan Limits
Limit 20172016201520142013
401(k) Deferrals$18,000$18,000$18,000$17,500$17,500
401(k) Catch-up Contributions$6,000$6,000$6,000$5,500$5,500
Defined Contribution Limit $54,000$53,000$53,000$52,000$51,000
Defined Benefit Limit $215,000$210,000$210,000$210,000$205,000
Compensation Limit $270,000$265,000$265,000$260,000$255,000
Highly Compensated Employees$120,000$120,000$120,000$115,000$115,000
403(b) / 457 Deferrals$18,000$18,000$18,000$17,500$17,500
SIMPLE Deferrals$12,500$12,500$12,500$12,000$12,000
SIMPLE Catch-up Contributions$3,000$3,000$3,000$2,500$2,500
SEP Minimum Compensation$600$600$600$550$550
Social Security Wage Base $127,200$118,500$118,500$117,000$113,700

Defined Contribution Plans

Defined Contribution Plans, such as profit-sharing and 401(k) plans, contain limits on the amount of annual contributions that can be funded to the plan. These include both participant and plan-wide limits. In determining contributions, employers must exclude salary above the annual Compensation Limit as shown in the chart above.

Participant Limits

Participants in defined contribution plans are subject to several specific limits on how much can be allocated to their individual retirement accounts. These limits are indexed annually for inflation.

  • Profit-Sharing Plans – No participant can receive annual additions (contributions and forfeitures) from a profit-sharing plan in excess of the IRC §415 Limit of 100% of Salary or $54,000.
  • 401(k) Plans – For 2017, no employee can defer more than $18,000 of his own salary into a 401(k) Plan. In addition, no participant can exceed the IRC §415 Limit of 100% of Salary or $54,000, when considering all contributions (e.g., employee, employer-matching, and profit-sharing). Highly Compensated Employees may also be limited in the amount of salary deferrals and matching contributions, because of the ADP and ACP Tests. Safe Harbor 401(k) Plans are not subject to the ADP and ACP Test.

Employer Limits

Employers are limited in the amount they can contribute to qualified plans. Employers may claim a tax deduction for contributions (either matching or profit sharing contributions) of up to 25% of eligible payroll. Employee Salary Deferral Contributions are not subject to this limit, and can be claimed as an additional tax deduction by the employer.

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Managing Your Plan to Minimize Top-Heavy Issues
January 10, 2017

Happy New Year! To start the year off right, we would like to share insights on how you can help your business-owner clients minimize pains associated with top-heavy issues. Because top-heavy required employer contributions to 401(k) plans can create budget challenges and may be a thorn in the side of some business owners, this article discusses creative ways to alleviate related frustrations, satisfy existing clients and gain new relationships along the way.

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