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8 November 202422 minute read

IRS announces 2025 retirement and benefit plan limits, SSA announces COLA adjustment

On November 1, 2024, the Internal Revenue Service (IRS) announced cost-of-living adjustments (COLAs) to the dollar limits on benefits and contributions in retirement plans for 2025. These adjustments are in addition to previously announced increases in limits to other employee benefit plans. In addition, the Social Security Administration (SSA) recently announced the COLA to the Social Security wage base for 2025.

The updated limits for 2025, as compared to last year’s limits, are set forth in the charts below.

 

Qualified retirement plan contribution limits 2024 2025
Section 401(k) and 403(b) plan elective deferral limit
(Code Section: 402(g)(1))
$23,000 $23,500
Catch-up contribution limit (for participants aged 50 or older)
(Code Section: 414(v)(2)(B)(i))
$7,500 $7,500
Catch-up contribution limit ("super" catch-up for participants aged 60-63)
(Code Section: 414(v)(2)(E)(i))
N/A $11,250
Wage threshold for Roth-only catch-up contributions (beginning in 2026) 
(Code Section: 414(v)(7)(A))
$145,000 $145,000
Annual compensation limit
(Code Sections: 401(a)(17), 401(l), 408(k)(3)(C), and 408(k)(6)(D)(ii))
$345,000 $350,000
Defined contribution plans – annual additions limit
(Code Section: 415(c)(1)(A))
$69,000 $70,000
Defined benefit plans – maximum annual benefit 
(Code Section: 415(b)(1)(A))
$275,000 $280,000
Annual distribution dollar amount used to determine the five-year employee stock ownership plan (ESOP) distribution limit
(Code Section: 409(o)(1)(C)(ii))
$275,000 $280,000
ESOP limit for determining the maximum account balance subject to the five-year distribution limit
(Code Section: 409(o)(1)(C)(ii))
$1,380,000 $1,415,000
Other limits 2024 2025

Highly compensated employee compensation threshold
(Code Section: 414(q)(1)(B))

$155,000 $160,000

Key employee compensation threshold
(Code Section: 416(i)(1)(A)(i))

$220,000 $230,000
Section 457 plan elective deferral limit – deferred compensation plans of state and local governments and tax-exempt organizations
(Code Section: 457(e)(15))
$23,000 $23,500
Pension-linked emergency savings accounts (PLESAs) limit 
(Code Section: 402A(e)(3)(A)(i))
$2,500 $2,500
SIMPLE plans 2024 2025
Maximum contributions
(Code Section: 408(p)(2)(E))
$16,000 $16,500
Catch-up contributions (for participants aged 50 or older)
(Code Section: 414(v)(2)(B)(ii))
$3,500

$3,500

 

The SSA announced the COLA to the Social Security contribution and benefit base (also known as the "taxable wage base") for 2025.

Social Security taxable wage base 2024 2025
Social Security taxable wage base $168,600 $176,100

Note: Federal Insurance Contributions Act (FICA) tax rates remain unchanged. The Old-Age, Survivors, and Disability Insurance (OASDI) tax of 6.20 percent each for employers and employees (12.4 percent for self-employed individuals) applies to wages up to the Social Security annual taxable wage base. The Medicare tax of 1.45 percent each for employers and employees is not limited to the taxable wage base and applies to all wages.

An additional Medicare tax of 0.9 percent for employees only applies to all wages over specified income thresholds based on filing status ($250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for all other taxpayers). Employers are responsible for withholding the 0.9 percent additional Medicare tax on an individual's wages paid in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding additional Medicare tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold the tax each pay period until the end of the calendar year. There is no employer match for additional Medicare Tax. 


The health savings account (HSA) and high-deductible health plan (HDHP) limits are as follows:

HSA/HDHP limits 2024 2025
HSA maximum health savings account contribution 

Self: $4,150

Family: $8,300

Self: $4,300

Family: $8,550

HSA catch-up contribution (for participants aged 55 or older) $1,000 $1,000
HDHP minimum annual deductible

Self: $1,600

Family: $3,200

Self: $1,650

Family: $3,300

HDHP maximum out of pocket

Self: $8,050

Family: $16,100

Self: $8,300

Family: $16,600

 

The flexible spending account (FSA) limits are as follows:

FSA limits 2024 2025
Health FSA

$3,200

Maximum carryover to following plan year: $640

$3,300

Maximum carryover to following plan year: $660

Dependent care FSA

Family: $5,000**

Married, filing separately: $2,500

Family: $5,000**

Married, filing separately: $2,500

**Married and filing a joint return or single parent filing

 

Excepted benefit health reimbursement arrangement (EBHRA)

Arrangements 2024 2025
EBHRAs $2,100 $2,150

 

Transit and parking fringe benefits limit

Transit and parking fringe benefits limit 2024 2025
Transit/parking $315/month $325/month

 

Action items for employers

Employers are encouraged to:

  • Update any plan documents that identify the annual limitations
  • Update participant communications, as the limits may impact important benefit elections for 2025
  • Update Human Resource Information Systems (HRIS) and/or payroll systems with new limitations for administration, recordkeeping, and tax reporting
  • Ensure all vendor data feeds are updated to comply with the new limits

For more information, please contact any of the members of our Employee Benefits and Executive Compensation group.

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