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!
- Posted by Ferenczy Benefits Law Center
- On November 1, 2024