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.
We have compiled a chart summarizing the key limits below, including how they compare with those in the previous year.
| COMPENSATION AND BENEFITS LIMITS | |||
| 2025 | 2024 | 2023 | |
| 401(k)/403(b) Plan Deferral Limit | $23,500 | $23,000 | $22,500 |
| Catch-Up Contributions (401(k), 403(b) & Governmental 457(b) Plans) | $7,500 ($11,250 for those ages 60-63) | $7,500 | $7,500 |
| Defined Contribution Dollar Limit | $70,000 | $69,000 | $66,000 |
| Defined Benefit Annual Limit | $280,000 | $275,000 | $265,000 |
| Pay Threshold for Determining Highly Compensated Employee | $160,000 (for determinations in 2026) | $155,000 (for determinations in 2025) | $150,000 (for determinations in 2024) |
| Annual Compensation Limit | $350,000 | $345,000 | $330,000 |
| 457(b) Plan Deferral Limit | $23,500 | $23,000 | $22,500 |
| Social Security Taxable Wage Base | $176,100 | $168,600 | $160,200 |
Contact your Faegre Drinker benefits attorney with questions or for assistance with implementing the new retirement plan limits.
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