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FLASHPOINT: IRS ANNOUNCES 2025 COST OF LIVING ADJUSTMENTS TO VARIOUS RETIREMENT PLAN LIMITS

FLASHPOINT: IRS ANNOUNCES 2025 COST OF LIVING ADJUSTMENTS TO VARIOUS RETIREMENT PLAN LIMITS

The IRS just released the cost-of-living adjustments for various retirement plan limitations that will take effect on January 1, 2025.  The current rate of inflation has leveled off so that we’re no longer seeing the big increases from the past.  These modest increases are still welcome.  The limits that increased for 2025 are shown below in blue bold italics, and include small increases in the 415 and 402(g) limits.   It also includes the new limits for the additional catch-up contributions for participants ages 60-63 and the deferral limits for Starter 401(k) Plans.

The 2025 and prior years’ limits are as follows:

Limit Type For Calendar Year
2025 2024 2023 2022
Maximum DB Plan Benefit (IRC §415(b)) (applies to limitation years ending in indicated year) $280,000 $275,000 $265,000 $245,000
Max DC Annual Addition (IRC §415(c)) (applies to limitation years ending in indicated year) $70,000 $69,000 $66,000 $61,000
Salary Deferral Limit (IRC §402(g)) $23,500 $23,000 $22,500 $20,500
Catch-up Limit for 401(k), 403(b), 457 plans (applies to calendar year) $7,500 $7,500 $7,500 $6,500
Catch-up Limit (age 60-63) for 401(k), 403(b), 457 plans (applies to calendar year) $11,250
HCE Compensation (applies to lookback years in indicated year) $160,000 $155,000 $150,000 $135,000
Max Plan Compensation for Retirement Plan Purposes (IRC §401(a)(17)) (applies to plan years beginning in indicated year) $350,000 $345,000 $330,000 $305,000
Key Employee: Officer $230,000 $220,000 $215,000 $200,000
Key Employee: 1% Owner $150,000 $150,000 $150,000 $150,000
Social Security Taxable Wage Base for OASDI Contributions $176,100 $168,600 $160,200 $147,000
Maximum Domestic Abuse Distribution (IRC §72(t)(2)(K)(ii)(1)) $10,300 $10,000
457(b) Contribution Limit $23,500 $23,000 $22,500 $20,500
Starter 401(k) Deferral-only Arrangement Limit $6,000 $6,000
Starter 401(k) Deferral-only Catch-Up $1,000 $1,000
SIMPLE Salary Deferral Limit $16,500 $16,000 $15,500 $14,000
SIMPLE Salary Deferral Limit ( <50 participants or larger election) (IRC §408(p)(2)(E)(i)(l)) $17,600
SIMPLE Catch-up Limit $3,500 $3,500 $3,500 $3,000
SIMPLE Catch-up Limit (age 60-63) $5,250
SIMPLE Nonelective Contribution Limit $5,100 $5,000
IRA Contribution Limit (IRC §219(b)(5)(A)) $7,000 $7,000 $6,500 $6,000
IRA Catch-up Limit (IRC §219(b)(5)(B)(iii)) $1,000 $1,000
SEP Threshold $750 $750 $750 $650
ESOP: 5-year Distribution Factor $280,000 $275,000 $265,000 $245,000
ESOP: Account Balance $1,415,000 $1,380,000 $1,330,000 $1,230,000
Premiums for QLACs (Treas. Reg. §1.401(a)(9)-6(q)(2)(ii)) $210,000 $200,000 $200,000 $145,000

We wish all of you a healthy and prosperous 2025!  If you have any questions, please let us know.  Remember:  we are your ERISA solution!

 

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  • Posted by Ferenczy Benefits Law Center
  • On November 1, 2024