On November 1, 2024, the IRS announced in Notice 2024-80 cost-of-living adjustments to the tax-qualified retirement plan dollar limits for 2025. Most of the applicable dollar limits currently effective for 2024 will increase moderately compared with the prior year. Below is a summary of the limits that are generally relevant for most retirement plans.

Effective January 1, 2025:

• The elective deferral limit for 401(k), 403(b) and eligible 457(b) plans is increased from $23,000 to $23,500.
• The catch-up contribution limit for those aged 50 or order will remain at $7,500.
• The higher catch-up contribution limit added by SECURE 2.0 for individuals age 60 to 63 beginning in 2025 is $11,250.
• The dollar limit on the annual benefit under a defined benefit plan is increased from $275,000 to $280,000.
• The dollar limit on annual allocations under a defined contribution plan is increased from $69,000 to $70,000.
• The annual compensation limit is increased from $345,000 to $350,000.
• The annual compensation limit for eligible participants in certain governmental plans that, as of July 1, 1993, allowed for the cost-of-living adjustments to the annual compensation limit in effect at that time is increased from $505,000 to $520,000.
• The dollar threshold for “highly compensated employee” status used in performing various nondiscrimination tests is increased from $155,000 to $160,000.
• The dollar threshold for “key employee” status for officers used in performing the “top-heavy” test is increased from $220,000 to $230,000.