CLIENT ALERT: IRS Announces 2025 Retirement Plan And Other Benefit Limitations
The Internal Revenue Service recently announced the new inflation adjusted dollar limitations for retirement plan contributions and benefits beginning January 1, 2025. Many of the limits have gone up, which will enhance the value of many employee benefit plans. The adjusted limits are listed below.
| Limitation | 2025 Amount | 2024 Amount |
| Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans | $23,500 | $23,000 |
| Catch-up Contribution Limit for Individuals Ages 50 through 59 and 64 and Older to 401(k), 403(b) or SARSEP Plans, and Governmental 457 Plans | $7,500 | $7,500 |
| “Super” Catch-Up Contribution Limit for Individuals who attain age 60, 61, 62, or 63 in 2025 to 401(k), 403(b), and Governmental 457 Plans | $11,250 | N/A |
| Limitation on Annual Additions to a Defined Contribution Plan1 | $70,000 | $69,000 |
| Limitation on Annual Benefits from a Defined Benefit Plan2 | $280,000 | $275,000 |
| Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan | $350,000 | $345,000 |
| Highly Compensated Employee Compensation Threshold3 | $160,000 | $155,000 |
| Key Employee: Officer | $230,000 | $220,000 |
| Key Employee: 1% Owner | $150,000 | $150,000 |
| Social Security Taxable Wage Base | $176,100 | $168,600 |
| IRA/Roth IRA Contribution Limit | $7,000 | $7,000 |
Health Savings Accounts:
|
$4,300 $8,550 $1,000 |
$4,150 $8,300 $1,000 |
| Health Flexible Spending Accounts4 | $3,300 | $3,200 |
Our Employee Benefits Practice Group can help you to understand how these new limits may affect your plans and whether new benefit structures may be available for you and your companies.
Please contact the Olshan attorney with whom you regularly work or the Practice Group Leader, Stephen Ferszt, if you would like to discuss further or have questions.
This publication is issued by Olshan Frome Wolosky LLP for informational purposes only and does not constitute legal advice or establish an attorney-client relationship. In some jurisdictions, this publication may be considered attorney advertising.
Copyright © 2024 Olshan Frome Wolosky LLP. All Rights Reserved.
1 In no event may annual additions exceed 100% of a participant’s compensation.
2 In no event may a participant’s annual benefit exceed 100% of the participant’s average compensation for the participant’s highest three consecutive years.
3 Generally, an employee is considered “highly compensated” if the employee:
(a) was a five-percent owner of the employer at any time during the current or preceding year; or
(b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.
4 This limit applies only to voluntary employee salary reduction (pre-tax) contributions.
CLIENT ALERT: IRS Announces 2025 Retirement Plan And Other Benefit Limitations
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