The IRS Releases 2017 Limits
Executive Director
The IRS released its 2017 limits for retirement plans, several of which directly affect ESOPs. (For a table comparing 2015, 2016, and 2017 limits, see this page at IRS.gov.) The limitation on annual additions for defined contribution plans increases in 2017 from $53,000 to $54,000, or to $60,000 for those eligible for "catch-up" contributions. The limit is this dollar amount or an amount equal to 100% of the participant's compensation, whichever is less.
The dollar amount for determining the maximum ESOP account balance subject to a 5-year distribution period is increased from $1,070,000 to $1,080,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $210,000 to $215,000.
The dollar limitation concerning the definition of "key employee" in a top-heavy plan is increased from $170,000 in 2016 to $175,000 in 2017. The limitation used in the definition of "highly compensated employee" remains unchanged at $120,000.