Contribution Limits


2016 Contribution Limits for 403(b) and 401(k) Plans

Perhaps the single most important retirement account available to employees today is their employer-sponsored 401(k) or 403(b) plan. These defined contribution retirement plans have, in many cases, replaced the traditional defined benefit pension plans of years gone by. These 401(k) and 403(b) retirement plans allow for a significant amount of money to be set aside annually as Participants plan for their Future-Funded Ministry. These retirement plan savings are subject to significant tax advantages as well.

As the taxation of monies contributed to a retirement plan is often deferred to a later point in time, the IRS limits the amount of money that can be deposited into a 401(k) or 403(b) plan on an annual basis. The IRS refers to these retirement plan limits simply as the "Contribution Limits". The Contribution Limits apply to both employee and employer contributions. The Contribution Limits change from one year to the next as they are directly tied into the Federal Cost of Living Adjustment (COLA).

It is the Plan Sponsor / Plan Administrator's responsibility to monitor the amount of employee and employer money that is contributed into a Participant's retirement plan account on an annual basis. Most payroll systems allow for this to be easily monitored. If excess contributions are made into the plan and not corrected in a timely manner, the plan becomes subject to disqualification in the event of an IRS audit of the plan.

Outlined below are the basic 403(b) and 401(k) retirement plan Contribution Limits for 2016. These limits must be adhered to. Remember that your retirement plan continues to be one of the very best ways to prepare for the future financially.


2016 Limits at a Glance:

Elective Deferrals (Voluntary Contributions)  $18,000 (IRS

(*or 100% of includible compensation, apply the lesser of the two)

$18,000 *

§402(g)

Age 50 Catch-up Contributions

$6,000

§414(v)

Combined Employee and Employer Contribution Limits

(*or 100% of includible compensation, apply the lesser of the two)

$53,000 *

§415

Combined Employee and Employer Contribution Limits (with Age 50 Catch-up Contributions)

(* or 100% of includible compensation, apply the lesser of the two)

$59,000 *

§415 & §402(g)

15 Years of Service Catch-up Contributions (see details below *)

$3,000

§402(g)(7)

Low and Middle Income Taxpayers "Saver's Credit" (see details below ***)