New Dollar Limits Applicable to Retirement Plans for 2025
The Internal Revenue Service and the Social Security Administration have announced the cost of living adjustments (COLA) applicable to dollar limitations for retirement plans and the Social Security wage base for 2025. Many of the limits that applied to the 2024 plan year changed for the 2025 plan year.
Employers should make sure that the individuals in charge of their payroll systems are aware of these limits. Also, employee communications and forms should be reviewed and updated as necessary to reflect these 2025 dollar limits.
Compensation and Benefit Limits
| Description | 2024 | 2025 |
|
Maximum annual compensation that may be taken into account for determining benefits or contributions |
$345,000 |
$350,000 |
|
Maximum employee elective deferral contribution amount for employees who participate in 401(k), 403(b) and most 457 plans |
$23,000 |
$23,500 |
|
Maximum 401(k) and 403(b) and governmental 457(b) catch-up contribution amount for participants age 50 or older |
$7,500 |
$7,500 |
|
Special catch-up provision for participants age 60 through 63* |
N/A |
$11,250 |
|
Defined contribution and SEP maximum annual addition** |
$69,000 |
$70,000 |
|
Defined benefit maximum annual benefit |
$275,000 |
$280,000 |
|
Key employee officer compensation for top-heavy plan |
$220,000 |
$230,000 |
|
Pay threshold for determining highly compensated employee (HCE) |
$155,000 |
$160,000 |
|
Deferral Limit for SIMPLE Retirement Accounts |
$16,000 |
$16,500 |
|
Age 50+ catch-up limit for SIMPLE Retirement Accounts |
$3,500 |
$3,500 |
|
Social Security taxable wage base (FICA) |
$168,600 |
$176,100 |
*The special catch-up provision in SECURE 2.0 Act takes effect in 2025 and permits those age 60 through 63 to contribute $11,250 instead of $7,500 in 2025.
**Limit not applicable to catch-up contributions.
If you have any questions concerning the plan dollar limits or would like assistance with your employee retirement plans, please contact any member of our Employee Benefits practice group.