No 401(k) Boost in 2017 – Again

November 8, 2016 — 5:34 PM EST

Planning to sock away even more of your hard-earned cash into your 401(k) plan next year? As long as it doesn’t exceed the maximum contribution limit, you’re good to go. But before you ramp up your contributions, there’s something you must consider: The limit will remain at the same level it’s been since 2015.

That’s right. The latest news from the IRS (see is that your annual elective deferrals for traditional and safe harbor 401(k) plans will be limited to $18,000 for 2017.This is also the case for 403(b), 457 and profit-sharing plans.

For some, this may seem like a hefty sum of cash. But for those who can afford to save more for retirement and capitalize on the power of compounding interest, this news is flat-out disappointing.

Why the Trend?

So, why hasn’t there been an increase in the maximum contribution amount? 


The tax law places limits on the dollar amount of contributions to retirement plans and IRAs and the amount of benefits under a pension plan. IRC Section 415 requires the limits to be adjusted annually for cost-of-living increases. 

The Consumer Price Index also plays an integral role in whether a cost-of-living adjustment will be implemented to increase the contribution limits, CNBC adds. Again, this year, the cost of living didn't rise enough to trigger a raise.

What About Catch-Up Contributions?

Unfortunately, the catch-up contributions for those who are 50 years of age and over will also remain the same. The current limits are:

  • $3,000 for SIMPLE 401(k) plans

  • $6,000 for traditional and safe harbor 401(k) plans

Will There Be a Boost Anytime Soon?

Not until next year, at the earliest. Meantime, it makes sense to explore other investment vehicles to save for retirement and make your money work for you. For starters, see whether you can also open an IRA. The answer to Can you have both a 401(k) and an IRA is yes, though tax deductibility varies according to your  income. And that's just one place to start saving additional retirement funds. For more, see I Maxed Out My 401(k)! Now What?