November 2024 - Spotlight on Benefits

The Internal Revenue Service (IRS) recently announced the 2025 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2025. The following limits apply to retirement plans in 2025:

The limit on elective deferrals under 401(k), 403(b) and eligible 457(b) plans increased to $23,500.
The limit on catch-up contributions by participants aged 50 or older did not change and remains at $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2025 is $31,000.
The enhanced catch-up contribution limit for those ages 60-63 in 2025 is $11,250. This means that the maximum amount of elective deferral contributions for these participants in 2025 is $34,750.
The Internal Revenue Code (Code) Section 415 annual addition limit is increased to $70,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $280,000 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 $350,000.
The dollar level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $160,000 (which, under the look-back rule, applies to HCE determinations in 2026 based on compensation paid in 2025).
The dollar level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $230,000.

Continue reading “IRS Announces 2025 Retirement Plan Limits”

During our October 30, 2024 webinar, “It’s 2024 and … It’s Decision Time in the Retirement Plan World!” we polled our audience on their interest in adding optional features available under Secure Act 2.0 (discussed in our prior blog post). The results are in!

Based on the responses to our polls:

There is very little interest in adding Pension-Linked Emergency Savings Accounts with 60 percent of respondents selecting “Strong No” and an additional 13 percent responding “Lean No,” for a total negative response rate of 73 percent.
Similarly, a strong response against adding Emergency Personal Expense Distribution with a collective 65 percent of respondents selecting “Strong No” or “Lean No.”
Student Loan Matching Contributions were not given a passing grade with a collective 56 percent of respondents selecting “Strong No” or “Lean No.”
In contract, there was more interest in adding Qualified Birth or Adoption Distribution (a collective 40 percent “Strong Yes” or “Lean Yes”) and Domestic Abuse Victim Distribution (a collective 39 percent “Strong Yes” or “Lean Yes”).
The Disaster Recovery Distribution was in the middle, with 43 percent responding “Maybe,” 29 percent not interested in adding these to their plan and 15 percent planning to add this option to their plan.

Continue reading “Trends in Optional Features Available Under Secure Act 2.0”