November 01, 2024

IRS Announces Increased Retirement Plan Limits for 2025

Employee Benefits

2 min read

IRS Announces Increased Retirement Plan Limits for 2025

On November 1, 2024, the Internal Revenue Service (IRS) announced in IRS Notice 2024-80 cost-of-living adjustments to the applicable dollar limits for retirement plans for 2025.

The table below compares the applicable dollar limits for retirement plans for 2025 and 2024.

Employers are encouraged to work with their retirement plan recordkeepers and payroll providers to update these limits in applicable systems for January 1, 2025.

Retirement Plan Limits	2025	2024	Change from 2024
Section 401(k) / 403(b) / 457(b)(2) Plans maximum elective deferrals	$23,500	$23,000	+$500
Section 401(k) / 403(b) / 457(b)(2) Plans catch-up contribution limit* * For 2025, retirement plan participants age 50 and older may contribute up to $31,000.	$7,500	$7,500	No change
Section 401(k) / 403(b) / 457(b)(2) Plans: A higher catch-up contribution limit* applies for employees aged 60, 61, 62, and 63 who participate in these plans. * For 2025, retirement plan participants age 60,61,62, and 63 may contribute up to $34,750.	$11,250	N/A	N/A
Section 415(c)(1)(A) Defined contribution annual additions limit	$70,000	$69,000	+1,000
Section 414(q)(1)(B) Highly compensated employee	$160,000	$155,000	+$5,000
Section 416(i)(A)(i) “Key employee” in a top-heavy plan	$230,000	$220,000	+$10,000
Section 401(a)(17) Annual compensation limit	$350,000	$345,000	+$5,000
Section 408(p)(2)(E) SIMPLE 401(k) Plans	$16,500	$16,000	+$500

For more information on the landmark retirement plan legislation known as “Secure 2.0,” enacted in late 2022, click here, here, and here.

Risk Strategies is here to help. Contact us directly at benefits@risk-strategies.com.

The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.