Know Your Limits in 2016

Each year, the IRS reviews changes in the cost of living and makes necessary adjustments to limits for employees’ benefits contributions for the following tax year. The limits for 2016 are as follows:

  •  Transportation flexible savings accounts: parking limit of $255/mo (increase of $5 from 2015) and transit expenses limit of $255/mo (increase of $125 from 2015)
  • Health flexible savings accounts: limit of $2,550 (no change from 2015)
  • 401(k), 403(b), and most 457 plans: annual contribution limit of $18,000 (no change from 2015) and annual catch-up contribution limit for employees 50 and older is $6,000 (no change from 2015)
  • Individual Retirement Account (IRA): annual limit of $5,500 (no change from 2015) and annual catch-up contribution limit for employees 50 and older is $1,000 (no change from 2015)
  • Health Savings Account (HSA): annual employer and employee limits of $3,350 for individuals (no change from 2015) and $6,750 for families (increase of $100 from 2015); annual catch-up contribution limit for employees age 55 or older of $1,000 (no change from 2015)

We encourage employers to check with their benefits departments to make sure employees are notified of these new limits in setting their own contributions for 2016. If your organization is looking at how you structure your benefits and employer contribution, please reach out to the Clark & Gotzler attorneys for advice.