Resource Center:
Event List and Registration
Newsletters
Articles
Web Resources
Printable Version
1997 Cost of Living Adjustments Set by Internal Revenue Service
December 01, 1996-
The Internal Revenue Service recently released cost of living adjustments to amounts involved in administering retirement plans. The Pension Benefit Guaranty Corporation and the Social Security Administration have also announced new adjusted limits. These limits are effective January 1, 1997 (or where applicable, for Plan Years beginning on or after January 1, 1997). The 1993, 1994, 1995, 1996 and 1997 limits are as follows:
| |
1993 | 1994 | 1995 | 1996 | 1997 |
| Maximum 401(k) and 403(b) Limits | |||||
| Maximum 401(k) pre-tax salary deferrals by employees ($7,000 limit) |
$ 8,994 | $ 9,240 | $ 9,240 | $ 9,500 | $ 9,500 |
| Maximum 403(b) pre-tax contributions to tax-shelter annuities (The 403(b)
annuity limit will not be indexed until the 401(k) limit exceeds $9,500. At that time, the same limit will govern both types of contributions.) |
$ 9,500 | $ 9,500 | $ 9,500 | $ 9,500 | $ 9,500 |
| Maximum Compensation Considered | |||||
| General compensation limit | $235,840 | $150,000 | $150,000 | $150,000 | $160,000 |
| Collectively Bargained Plan Compensation Limit | $235,840 | $242,280 | $245,000 | $250,000 | |
| State/Local and Tax-Exempt Section 457 Limits | |||||
| Maximum 457 deferral dollar limit by employees ($7,500 limit) | $ 7,500 | $ 7,500 | $ 7,500 | $ 7,500 | $ 7,500 |
| Section 415 Limits | |||||
| Defined benefit plan maximum (Section 415(b)) | $115,641 | $118,800 | $120,000 | $120,000 | $125,000 |
| Defined contribution plan maximum (415(c)) | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 |
| Highly Compensated Employees* *Definition of Highly Compensated Employee was changed by Small Business Job Protection Act |
|||||
| $75,000 amount | $ 96,368 | $ 99,000 | $100,000 | $100,000 | |
| $50,000 amount | $ 64,245 | $ 66,000 | $ 66,000 | $ 66,000 | |
| Includible officers | $ 57,820 | $ 59,400 | $ 60,000 | $ 60,000 | |
| $80,000 amount | $ 80,000 | ||||
| Excess Distributions Under Section 4980A Grandfather Rule | |||||
| Regular limit | $144,551 | $148,500 | $150,000 | $155,000 | $160,000 |
| Lump sum distributions | $722,755 | $742,500 | $750,000 | $775,000 | $800,000 |
| Employee Stock Ownership Plans | |||||
| Threshold amount for exception to five-year distribution requirement | $642,560 | $660,000 | $670,000 | $690,000 | $710,000 |
| Incremental amount for distribution beyond five years | $128,490 | $132,000 | $132,000 | $135,000 | $140,000 |
| Simplified Employees Pensions (SEPs) | |||||
| Compensation at which plan participation is mandatory | $ 385 | $ 396 | $ 400 | $ 400 | $ 400 |
| Simple Retirement Accounts (Added by º1421 of Small Business Job Protection Act) |
$ 6,000 | ||||
| Pension Benefit Guaranty Corporation | |||||
| Maximum guaranteed monthly benefit | $2,457.50 | $2,556.82 | $2,573.86 | $2,642.05 | $2,761.36 |
| Social Security Maximum taxable earnings subject to FICA or SECA tax: |
|||||
OASDI portion |
$ 57,600 | $ 60,600 | $ 61,200 | $ 62,700 | $ 65,400 |
Medicare portion |
$135,000 | Unlimited | Unlimited | Unlimited | Unlimited |
| Maximum FICA tax | $5,528.70 | Unlimited | Unlimited | Unlimited | Unlimited |
| FICA Tax Rate | 7.65% | 7.65% | 7.65% | 7.65% | 7.65% |
OASDI |
6.20% | 6.20% | 6.20% | 6.20% | 6.20% |
Medicare |
1.45% | 1.45% | 1.45% | 1.45% | 1.45% |
| Maximum tax for self-employed (does not account for 50% of self-employment tax deduction) | $11,057.40 | Unlimited | Unlimited | Unlimited | Unlimited |
| Self-employed tax rate (combined) | 15.30% | 15.30% | 15.30% | 15.30% | 15.30% |
OASDI |
12.40% | 12.40% | 12.40% | 12.40% | 12.40% |
| Medicare | 2.90% | 2.90% | 2.90% | 2.90% | 2.90% |
| Earnings Limit for Social Security | |||||
| Beneficiaries ages 65 to 69 | $ 10,560 | $ 11,160 | $ 11,280 | $ 12,500 | $ 13,500 |
| Beneficiaries under age 65 | $ 7,680 | $ 8,040 | $ 8,160 | $ 8,280 | $ 8,640 |
