New retirement plan limitations announced by the IRS for 2024
On November 1, 2023, the IRS released IRS Notice 2023-75, providing for the new cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2024 Tax Year. Changes to the limits are made each year based upon the Social Security cost-of-living increases for the prior twelve month period. Last year, there was a significant increase in the cost-of-living in the prior period and retirement limits went up dramatically. This year, the increase in the cost-of-living during the past twelve months has not been as significant. Thus, the applicable pension and retirement limitations have not risen nearly as much as they rose for the 2023 Tax Year.
Below are the new 2024 plan limitations:
2024 Retirement Plan Limits
| 2024 |
2023 |
2022 |
|
|
401(k),403(b) and 457(b) Deferral Limits |
$23,000 |
$22,500 |
$20,500 |
|
401(k) and 403(b) Catch-up Deferral Limits |
$7,500 |
$7,500 |
$6,500 |
|
Annual Limitation on Compensation |
$345,000 |
$330,000 |
$305,000 |
|
Defined Contribution Limitation |
$69,000 |
$66,000 |
$61,000 |
|
Defined Benefit Limitation |
$275,000 |
$265,000 |
$245,000 |
|
Highly Compensated Employee Compensation Threshold |
$155,000 |
$150,000 |
$135,000 |
|
Key Employee Compensation - Officer Threshold |
$220,000 |
$215,000 |
$200,000 |
|
SIMPLE Deduction |
$16,000 |
$15,500 |
$14,000 |
|
SIMPLE Catch-Up Contribution |
$3,500 |
$3,500 |
$3,000 |
|
IRA Contribution Limit |
$7,000 |
$6,500 |
$6,000 |
|
IRA Catch-Up Contribution Limit |
$1,000 |
$1,000 |
$1,000 |
|
Social Security Wage Base |
$167,700 |
$160,200 |
$147,000 |
Benefit programs should be a win-win for employers and employees. We strive to accomplish that goal in the design, implementation and operation of sophisticated benefit and executive compensation programs – qualified and non-qualified retirement programs and health and welfare plans. Our employee benefits team has a long track record of working to maximize the efficiency and economic feasibility of each program.
If you have any questions or would like more information, please contact one of McDonald Hopkins' employee benefits attorneys.
