IRS Announces Retirement Plan Limitations for 2025
November 5, 2024
By: Emily C. Kopp
On November 1, 2024, the Internal Revenue Service issued Notice 2024-80 announcing the cost-of-living adjustment (“COLA”) applicable to pension and retirement plan dollar limitations for the 2025 calendar year.
New for 2025 and courtesy of SECURE 2.0, a “super” catch-up contribution limit for 401(k), 403(b) and 457 plans, as well as SIMPLE 401(k) and SIMPLE IRA plans, applies for participants who will reach ages 60, 61, 62 or 63 by the end of the limitation year. For 401(k), 403(b) and 457 plans, the super catch-up contribution limit for 2025 is $11,250 instead of $7,500 and, for SIMPLE 401(k) plans and SIMPLE IRAs, the super catch-up contribution limit is $5,250 instead of $3,500.
Most of the dollar limits applicable to contribution and benefit limits, including the elective contribution limit for 401(k), 403(b) and 457(b) plans, will increase from the 2024 limits. Additionally, the Social Security Administration has determined that the 2025 benefit base will be $176,100, up from $168,600 in 2024. A change in a limitation means that the increase in the cost-of-living index was sufficient enough to trigger the applicable statutory COLA.
The following table summarizes many of the retirement plan limitations for the 2024 and 2025 tax years:
| Type of Limitation | Amount of Limitation for 2025 | Amount of Limitation for 2024 |
| Compensation Limit – 401(a)(17), 404(I), 408(k)(3)(C) [SEP], and 408(k)(6)(D)(ii) | $350,000 | $345,000 |
| Elective Deferral Limit for 401(k)/403(b)/457(b) Plans, SARSEPs – 402(g)(1), 457(e)(15), 408(k)(6)(A)(iv) | $23,500 | $23,000 |
| Catch-up Contribution Limit for 401(k)/403(b)/Governmental 457(b) Plans, SARSEPs – 414(v)(2)(B)(i) | $7,500 | $7,500 |
| Super Catch-up Contribution Limit for 401(k)/403(b)/Governmental 457(b) Plans, SARSEPs (Ages 60 through 63) – 414(v)(2)(E)(i) | $11,250 | N/A |
| Highly Compensated Employee Compensation Threshold – 414(q)(1)(B)(i) | $160,000 | $155,000 |
| Defined Benefit Plan Annual Benefit Limitation – 415(b)(1)(A) | $280,000 | $275,000 |
| Defined Contribution Plan Annual Addition Limitation - 415(c)(1)(A) | $70,000 | $69,000 |
| Key Employee Compensation Threshold for Officers – 416(i)(1)(A)(i) | $230,000 | $220,000 |
| SEP Eligibility Compensation Threshold – 408(k)(2)(C) | $750 | $750 |
| SIMPLE 401(k) Plan and SIMPLE IRA Elective Contribution Limit – 401(k)(11)(B)(i)(I), 408(p)(2)(E) | $16,500 | $16,000 |
| SIMPLE 401(k) Plan and SIMPLE IRA Catch-up Contribution Limit – 414(v)(2)(B)(ii) | $3,500 |
$3,500 |
| SIMPLE 401(k) Plan and SIMPLE IRA Super Catch-up Contribution Limit (Ages 60 through 63) – 414(v)(2)(E)(ii) | $5,250 | N/A |
| ESOP Maximum Account Balance Subject to 5-year Distribution Period – 409(o)(1)(C) | $1,415,000 | $1,380,000 |
| ESOP Incremental Amount for Lengthening 5-year Distribution Period - 409(o)(1)(C) | $280,000 | $275,000 |
| Compensation Limit for Grandfathered Participants in Certain Governmental Plans – 401(a)(17) | $520,000 | $505,000 |
For further information regarding the 2025 retirement plan limitations or to discuss any other retirement or welfare plan matters, please contact any member of our Employee Benefits and Executive Compensation Practice Group.
Disclaimer: The contents of this article should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult with counsel concerning your situation and specific legal questions you may have.
Practices
Industries
November 5, 2024
By: Emily C. Kopp
On November 1, 2024, the Internal Revenue Service issued Notice 2024-80 announcing the cost-of-living adjustment (“COLA”) applicable to pension and retirement plan dollar limitations for the 2025 calendar year.
New for 2025 and courtesy of SECURE 2.0, a “super” catch-up contribution limit for 401(k), 403(b) and 457 plans, as well as SIMPLE 401(k) and SIMPLE IRA plans, applies for participants who will reach ages 60, 61, 62 or 63 by the end of the limitation year. For 401(k), 403(b) and 457 plans, the super catch-up contribution limit for 2025 is $11,250 instead of $7,500 and, for SIMPLE 401(k) plans and SIMPLE IRAs, the super catch-up contribution limit is $5,250 instead of $3,500.
Most of the dollar limits applicable to contribution and benefit limits, including the elective contribution limit for 401(k), 403(b) and 457(b) plans, will increase from the 2024 limits. Additionally, the Social Security Administration has determined that the 2025 benefit base will be $176,100, up from $168,600 in 2024. A change in a limitation means that the increase in the cost-of-living index was sufficient enough to trigger the applicable statutory COLA.
The following table summarizes many of the retirement plan limitations for the 2024 and 2025 tax years:
| Type of Limitation | Amount of Limitation for 2025 | Amount of Limitation for 2024 |
| Compensation Limit – 401(a)(17), 404(I), 408(k)(3)(C) [SEP], and 408(k)(6)(D)(ii) | $350,000 | $345,000 |
| Elective Deferral Limit for 401(k)/403(b)/457(b) Plans, SARSEPs – 402(g)(1), 457(e)(15), 408(k)(6)(A)(iv) | $23,500 | $23,000 |
| Catch-up Contribution Limit for 401(k)/403(b)/Governmental 457(b) Plans, SARSEPs – 414(v)(2)(B)(i) | $7,500 | $7,500 |
| Super Catch-up Contribution Limit for 401(k)/403(b)/Governmental 457(b) Plans, SARSEPs (Ages 60 through 63) – 414(v)(2)(E)(i) | $11,250 | N/A |
| Highly Compensated Employee Compensation Threshold – 414(q)(1)(B)(i) | $160,000 | $155,000 |
| Defined Benefit Plan Annual Benefit Limitation – 415(b)(1)(A) | $280,000 | $275,000 |
| Defined Contribution Plan Annual Addition Limitation - 415(c)(1)(A) | $70,000 | $69,000 |
| Key Employee Compensation Threshold for Officers – 416(i)(1)(A)(i) | $230,000 | $220,000 |
| SEP Eligibility Compensation Threshold – 408(k)(2)(C) | $750 | $750 |
| SIMPLE 401(k) Plan and SIMPLE IRA Elective Contribution Limit – 401(k)(11)(B)(i)(I), 408(p)(2)(E) | $16,500 | $16,000 |
| SIMPLE 401(k) Plan and SIMPLE IRA Catch-up Contribution Limit – 414(v)(2)(B)(ii) | $3,500 |
$3,500 |
| SIMPLE 401(k) Plan and SIMPLE IRA Super Catch-up Contribution Limit (Ages 60 through 63) – 414(v)(2)(E)(ii) | $5,250 | N/A |
| ESOP Maximum Account Balance Subject to 5-year Distribution Period – 409(o)(1)(C) | $1,415,000 | $1,380,000 |
| ESOP Incremental Amount for Lengthening 5-year Distribution Period - 409(o)(1)(C) | $280,000 | $275,000 |
| Compensation Limit for Grandfathered Participants in Certain Governmental Plans – 401(a)(17) | $520,000 | $505,000 |
For further information regarding the 2025 retirement plan limitations or to discuss any other retirement or welfare plan matters, please contact any member of our Employee Benefits and Executive Compensation Practice Group.
Disclaimer: The contents of this article should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult with counsel concerning your situation and specific legal questions you may have.