n-16-62.pdf

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2017 Limitations Adjusted As Provided in Section 415(d), etc.

Notice 2016-62
Section 415 of the Internal Revenue Code (the Code) provides for dollar
limitations on benefits and contributions under qualified retirement plans. Section 415(d)
requires that the Secretary of the Treasury annually adjust these limits for cost-of-living
increases. Other limitations applicable to deferred compensation plans are also affected
by these adjustments under § 415. Under § 415(d), the adjustments are to be made
under adjustment procedures similar to those used to adjust benefit amounts under
§ 215(i)(2)(A) of the Social Security Act.
Cost-of-Living Adjusted Limits for 2017
Effective January 1, 2017, the limitation on the annual benefit under a defined
benefit plan under § 415(b)(1)(A) is increased from $210,000 to $215,000.
For a participant who separated from service before January 1, 2017, the
participant’s limitation under a defined benefit plan under § 415(b)(1)(B) is computed by
multiplying the participant’s compensation limitation, as adjusted through 2016, by
1.0112.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased in
2017 from $53,000 to $54,000.
The Code provides that various other dollar amounts are to be adjusted at the
same time and in the same manner as the dollar limitation of § 415(b)(1)(A). After taking
into account the applicable rounding rules, the amounts for 2017 are as follows:
The limitation under § 402(g)(1) on the exclusion for elective deferrals described
in § 402(g)(3) remains unchanged at $18,000.
The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and
408(k)(6)(D)(ii) is increased from $265,000 to $270,000.
The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of “key
employee” in a top-heavy plan is increased from $170,000 to $175,000.
The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account
balance in an employee stock ownership plan subject to a 5-year distribution
period is increased from $1,070,000 to $1,080,000, while the dollar amount used
to determine the lengthening of the 5-year distribution period is increased from
$210,000 to $215,000.
The limitation used in the definition of “highly compensated employee” under
§ 414(q)(1)(B) remains unchanged at $120,000.
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an
applicable employer plan other than a plan described in § 401(k)(11) or § 408(p)

for individuals aged 50 or over remains unchanged at $6,000. The dollar
limitation under § 414(v)(2)(B)(ii) for catch-up contributions to an applicable
employer plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over
remains unchanged at $3,000.
The annual compensation limitation under § 401(a)(17) for eligible participants in
certain governmental plans that, under the plan as in effect on July 1, 1993,
allowed cost-of-living adjustments to the compensation limitation under the plan
under § 401(a)(17) to be taken into account, is increased from $395,000 to
$400,000.
The compensation amount under § 408(k)(2)(C) regarding simplified employee
pensions (SEPs) remains unchanged at $600.
The limitation under § 408(p)(2)(E) regarding SIMPLE retirement accounts
remains unchanged at $12,500.
The limitation on deferrals under § 457(e)(15) concerning deferred compensation
plans of state and local governments and tax-exempt organizations remains
unchanged at $18,000.
The limitation under § 664(g)(7) concerning the qualified gratuitous transfer of
qualified employer securities to an employee stock ownership plan remains
unchanged at $45,000.
The compensation amounts under § 1.61-21(f)(5)(i) of the Income Tax
Regulations concerning the definition of “control employee” for fringe benefit
valuation purposes remains unchanged at $105,000. The compensation amount
under § 1.61-21(f)(5)(iii) remains unchanged at $215,000.
The dollar limitation on premiums paid with respect to a qualifying longevity
annuity contract under § 1.401(a)(9)-6, A-17(b)(2)(i) of the Income Tax
Regulations remains unchanged at $125,000.
The Code provides that the $1,000,000,000 threshold used to determine whether
a multiemployer plan is a systemically important plan under § 432(e)(9)(H)(v)(III)(aa) is
adjusted using the cost-of-living adjustment provided under § 432(e)(9)(H)(v)(III)(bb).
After taking the applicable rounding rule into account, the threshold used to determine
whether a multiemployer plan is a systemically important plan under
§ 432(e)(9)(H)(v)(III)(aa) remains unchanged at $1,012,000,000.
The Code also provides that several retirement-related amounts are to be
adjusted using the cost-of-living adjustment under § 1(f)(3). After taking the applicable
rounding rules into account, the amounts for 2017 are as follows:
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the
retirement savings contributions credit for married taxpayers filing a joint return
remains unchanged at $37,000; the limitation under § 25B(b)(1)(B) remains
unchanged at $40,000; and the limitation under §§ 25B(b)(1)(C) and
25B(b)(1)(D) is increased from $61,500 to $62,000.

The adjusted gross income limitation under § 25B(b)(1)(A) for determining the
retirement savings contributions credit for taxpayers filing as head of household
remains unchanged at $27,750; the limitation under § 25B(b)(1)(B) remains
unchanged at $30,000; and the limitation under §§ 25B(b)(1)(C) and
25B(b)(1)(D) is increased from $46,125 to $46,500.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the
retirement savings contributions credit for all other taxpayers remains unchanged
at $18,500; the limitation under § 25B(b)(1)(B) remains unchanged at $20,000;
and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from
$30,750 to $31,000.
The deductible amount under § 219(b)(5)(A) for an individual making qualified
retirement contributions remains unchanged at $5,500.
The applicable dollar amount under § 219(g)(3)(B)(i) for determining the
deductible amount of an IRA contribution for taxpayers who are active
participants in a qualified plan (or another retirement plan specified in
§ 219(g)(5)) filing a joint return or as a qualifying widow(er) is increased from
$98,000 to $99,000. The applicable dollar amount under § 219(g)(3)(B)(ii) for all
other taxpayers who are active participants (other than married taxpayers filing
separate returns) is increased from $61,000 to $62,000. If an individual or the
individual’s spouse is an active participant, the applicable dollar amount under
§ 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to
an annual cost-of-living adjustment and remains $0. The applicable dollar
amount under § 219(g)(7)(A) for a taxpayer who is not an active participant but
whose spouse is an active participant is increased from $184,000 to $186,000.
Accordingly, under § 219(g)(2)(A), the deduction for taxpayers making
contributions to a traditional IRA is phased out for single individuals and heads of
household who are active participants in a qualified plan (or another retirement
plan specified in § 219(g)(5)) and have adjusted gross incomes (as defined in
§ 219(g)(3)(A)) between $62,000 and $72,000, increased from between $61,000
and $71,000. For married couples filing jointly, if the spouse who makes the IRA
contribution is an active participant, the income phase-out range is between
$99,000 and $119,000, increased from between $98,000 and $118,000. For an
IRA contributor who is not an active participant and is married to someone who is
an active participant, the deduction is phased out if the couple’s income is
between $186,000 and $196,000, increased from between $184,000 and
$194,000. For a married individual filing a separate return who is an active
participant, the phase-out range is not subject to an annual cost-of-living
adjustment and remains $0 to $10,000.
The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(I) for determining
the maximum Roth IRA contribution for married taxpayers filing a joint return or
for a taxpayer filing as a qualifying widow(er) is increased from $184,000 to
$186,000. The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(II) for
all other taxpayers (other than married taxpayers filing separate returns) is
increased from $117,000 to $118,000. The applicable dollar amount under

§ 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not
subject to an annual cost-of-living adjustment and remains $0.
Accordingly, under § 408A(c)(3)(A), the adjusted gross income phase-out range
for taxpayers making contributions to a Roth IRA is $186,000 to $196,000 for
married couples filing jointly, increased from $184,000 to $194,000. For singles
and heads of household, the income phase-out range is $118,000 to $133,000,
increased from $117,000 to $132,000. For a married individual filing a separate
return, the phase-out range is not subject to an annual cost-of-living adjustment
and remains $0 to $10,000.
The dollar amount under § 430(c)(7)(D)(i)(II) used to determine excess employee
compensation with respect to a single-employer defined benefit pension plan for
which the special election under § 430(c)(2)(D) has been made is increased from
$1,106,000 to $1,115,000.
Drafting Information
The principal author of this notice is Tom Morgan of the Office of the Associate
Chief Counsel (Tax Exempt and Government Entities). However, other personnel from
the IRS participated in the development of this guidance. For further information
regarding this notice, contact Mr. Morgan at 202-317-6700 or John Heil at 443-853-5519
(not toll-free calls).