On Oct. 21, 2015, the IRS announced that annual limits and maximums for pension plans and other retirement-related items for tax year 2016 will stay at $18,000. This is because in most cases the slight increase in the cost-of-living index did not meet the statutory thresholds that trigger rate adjustments. You can see the Internal Revenue Service’s full chart of limitations here.
Not all employees will be able to contribute the maximum amount to their 401(k) accounts. But, employers and HR professionals should at least make their employees aware of the limits. The contribution limit could be a goal for some employees and may even encourage some to put extra money away in their retirement savings.
Employees who might reach that limit need to know this information as well because it could lead to them missing out on their employer’s contribution. These employees also need to be aware that if the limit remains stagnant, they may want to look into other retirement savings options.