Annual Plan Limits

Annual Plan Limits

The new limits provide increased opportunities for retirement plan sponsors and their employees.

202620252024
CONTRIBUTIONS AND BENEFIT LIMITS
Defined Contribution Plans$72,000$70,000$69,000
Defined Benefit/Cash Balance Plan Annuity$290,000$280,000$275,000
401(k), 403(b), and 457 Plan Elective Deferrals$24,500$23,500$23,000
SIMPLE Plan Elective Deferrals$17,000$16,500$16,000
IRA (Traditional and Roth)$7,500$7,000$7,000
Qualified Longevity Annuity Contract (QLAC)$210,000$210,000$200,000
ESOP amount to determine lengthening of the 5-year Distribution Rule$290,000$280,000$275,000
ESOP Maximum Balance subject to the 5-year Distribution rule$1,455,000$1,415,000$1,380,000
CATCH-UP CONTRIBUTIONS
401(k), 403(b), and Governmental 457(b)1 Plans$8,000$7,500$7,500
401(k), 403(b), and 457(b) Increased Catch-Up (ages 60-63)$11,250$11,250
SIMPLE Plans$4,000$3,500$3,500
SIMPLE Plans Increased Catch-Up (age 50 or over)$3,850$3,850$3,850
SIMPLE Plans Increased Catch-Up (ages 60-63)$5,250$5,250
IRA$1,100$1,000$1,000
OTHER
Maximum Considered Compensation$360,000$350,000$345,000
Social Security Taxable Wage Base (TWB)$184,500$176,100$168,600
Definition of Highly Compensated Employee (HCE)2$160,000$160,000$155,000
Definition of Key Employee$235,000$230,000$220,000
Roth Catch-Up Wage Threshold3$150,000$150,000
SEP Minimum Compensation$800$750$750
Defined Benefit Plan Single Employer Flat PBGC Rate Premium$111$106$101
Defined Benefit Plan Single Employer Variable Rate Premiums/$1,000 UVB$52$52$52

Additional information

  • The term “annual additions” generally means the sum for any year of employer contributions, employee contributions, and forfeitures.
  • For plans that include salary deferral features, individuals who are age 50 and older by the end of the calendar year may make catch-up contributions in addition to the annual addition limit, if catch-up contributions are permitted under the plan.

Notes for off-calendar plan years

  • Deferral limits are on a calendar year basis, regardless of plan year.
  • Use the taxable wage base (TWB) in effect at the beginning of the plan year.
  • Use the annual compensation limit in effect at the beginning of the plan year.
  • Use the annual additions limit in effect at the end of the plan year.

1 457(b) plans of state and local governments may allow catch-up contributions for participants who are aged 50 or older. Special 457(b) catch-up contributions, if permitted by the plan, allow a participant for 3 years prior to the normal retirement age (as specified in the plan) to contribute the lesser of the elective deferral limit or the basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions).

2 Amount shown used to determine HCEs for following plan year.

3 The SECURE 2.0 Act will require that all catch-up contributions must be Roth for participants whose FICA wages for the preceding calendar year from the employer sponsoring plan exceeded the threshold.

This material is for informational purposes only and is not intended to provide legal, tax, accounting, or investment advice. Consult with your own independent advisor for guidance on your specific issues or questions.

Emparion, LLC does not provide legal, investment or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact financial results. Emparion cannot guarantee that the information herein is accurate, complete, or timely. Emparion makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Please consult an attorney or tax professional regarding your specific situation.