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2016 Savings Opportunities Stand Pat

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Time once again to predict next year’s benefit plan limits. Annual COLA adjustments for most limits are measured using the CPI-U announced by the Bureau of Labor Statistics for July, August, and September. BLS announces these a few weeks after the indicated month ends. The September rate will be released this year on October 15, at which time the guessing will be over.

With both the July and August rates already in hand, there is little doubt that we will not see increases in the benefit limits for 2016. Interestingly, repeating the pattern from last year, the August CPI-U retreated slightly from the July level, underscoring the fact that reductions do happen. Although it is possible that the September CPI-U could retreat further, no matter how low it goes, the benefit plan limits will not be reduced from 2015 levels. IRS sets a floor on each year’s limits based on the limit from the prior year. To push any of the limits to new heights we would need a .58% increase just from August to September (7% annualized)—which would move the defined benefit limit to its next notch. That’s not likely to happen. Here are select predictions:

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