The IRS recently announced the 2024 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2024. The following limits apply to retirement plans in 2024:
- The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $23,000.
- The limit on additional catch-up contributions by participants aged 50 or older remains at $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2024 is $30,500.
- The Internal Revenue Code (“Code”) Section 415 annual addition limit is increased to $69,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $275,000 for defined benefit plans.
- The limit on the annual compensation that can be taken into account by qualified plans under Code Section 417 is increased to $345,000.
- The dollar level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $155,000 (which, under the look-back rule, applies to HCE determinations in 2025 based on compensation paid in 2024).
- The dollar level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $220,000.
We have compiled a chart summarizing the key limits below, including how they compare with those in the previous year. For a printable version of the chart, please click here.
|COMPENSATION AND BENEFITS LIMITS|
|401(k)/403(b) Plan Deferral Limit||$23,000||$22,500||$20,500|
|Catch-Up Contributions (401(k), 403(b) & Governmental 457(b) Plans)||$7,500||$7,500||$6,500|
|Defined Contribution Dollar Limit||$69,000||$66,000||$61,000|
|Defined Benefit Annual Limit||$275,000||$265,000||$245,000|
|Pay Threshold for Determining Highly Compensated Employee||$155,000 (for determinations in 2025)||$150,000 (for determinations in 2024)||$135,000 (for determinations in 2023)|
|Annual Compensation Limit||$345,000||$330,000||$305,000|
|457(b) Plan Deferral Limit||$23,000||$22,500||$20,500|
|Social Security Taxable Wage Base||$168,600||$160,200||$147,000|
Contact your Faegre Drinker benefits attorney with questions or for assistance with implementing the new retirement plan limits.
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