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USA: IRS contribution limits for 401(k) plans unchanged for 2016

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The maximum pretax contribution U.S. employees can make to their 401(k) plans in 2016 will remain at USD 18,000, unchanged from 2015.

Other parameters such as the maximum catch-up contribution older employees can make to a plan (USD 6,000), the amount of employee compensation that can be considered in calculating pension benefits and contributions to DC plans (USD 265,000), the definition of a highly compensated employee for nondiscrimination testing (USD 120,000) and the maximum annual benefit that can be funded through a DB plan (USD 210,000 per participant) do not change either.

The 2016 limits are not political decisions but the result of a computation based on inflation. The latest published inflation rate for the United States is 0.0% (12 months to September 2015).

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