401k and Retirement Plan Limits for the Tax Year 2017

401k and Retirement Plan Limits for the Tax Year 2017

On October 27, 2016, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017.

Highlights of Limitations That Remain Unchanged From 2016

  • The contribution limit for employees who participate in 401k, 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401k, 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Chart of Select Limits
401k Plan Limits for Year 2017 2016 2015 2014 2013 2012 2011
401k Elective Deferrals $18,000 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
Annual Defined Contribution Limit $54,000 $53,000 $53,000 $52,000 $51,000 $50,000 $49,000
Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 $255,000 $250,000 $245,000
Catch-Up Contribution Limit $6,000 $6,000 $6,000 $5,500 $5,500 $5,500 $5,500
Highly Compensated Employees $120,000 $120,000 $120,000 $115,000 $115,000 $115,000 $110,000
 
Non-401k Related Limits
403(b)/457 Elective Deferrals $18,000 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
SIMPLE Employee Deferrals $12,500 $12,500 $12,500 $12,000 $12,000 $11,500 $11,500
SIMPLE Catch-Up Deferral $3,000 $3,000 $3,000 $2,500 $2,500 $2,500 $2,500
SEP Minimum Compensation $600 $600 $600 $550 $550 $550 $550
SEP Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 $255,000 $250,000 $245,000
Social Security Wage Base $127,200 $118,500 $118,500 $117,000 $113,700 $110,100 $106,800

Ways to maximize your 401k

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401k

The responsibility for maximizing the value of your 401k falls largely on your shoulders. Here are ways that may help :

  • Participate in the program – If your employer offers a 401k plan, definitely participate! The sooner you start contributing to the plan, the longer the span of time your money has to grow. Think about it: if you don’t put anything in it, you can’t get anything out of it!
  • Take the company match – If you are asking yourself, “How much should I contribute to the plan?” Contribute as much as you can afford to, but no less than the amount required to receive the full company match.
  • Plan your portfolio – Properly planning your asset allocation is key to the majority of investment returns.
  • Diversify your assets – Spreading your assets among a variety of investments reduces risk. You may have heard about the old saying, “Don’t put all your eggs in the same basket!”
  • Avoid loans – Put your money in the plan and let it go! This is your long-term savings, and your future depends on its success, borrowing money will just hinder the progress.
  • Take it with you when changing jobs – Don’t cash out your 401k every time you change jobs. Even if the balance is too low, think about rolling it to an IRA and letting it grow.
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I 401(k) Contributions for 2011/2012

INDIVIDUAL AND ROTH INDIVIDUAL 401(K) Contribution Amounts and Deadlines

Year Maximum Salary Deferral

(if under age 50)
Maximum Salary Deferral

(if over age 50)
Contribution Deadline
2011 $16,500 $22,000 04/17/2012 (plus extensions)
2012 $17,000 $22,500 04/15/2013 (plus extensions)

Year Maximum Contribution

(if under age 50)
Maximum Contribution
(if over age 50)
Contribution Deadline
2011 $49,000 $54,500 04/17/2012 (plus extensions)
2012 $50,000 $55,500 04/15/2013 (plus extensions)
Individual 401(k) and Roth Individual 401(k) accounts must be established by December 31.

2008 401(k) Contribution Limits

Standard Limit 50+ Catch Up limit
$ 15, 500 $15,500 + $ 5000