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The IRS has released the 2025 cost-of-living adjustments to certain limits, thresholds and penalties that apply to employee benefits plans and programs. While most retirement plan limits and thresholds increased, there were a few reductions to limits and penalties under the Affordable Care Act. Please see below for a breakdown of these changes.
Qualified Retirement Plan Changes for 2025[1]
| Provision | 2025 | 2024 | Change? | |
| 401(k)/403(b) Plans | Annual Limit on Deferrals | $23,500 | $23,000 | Yes |
| Annual Catch-up Limit, 50 years or older | $7,500 | $7,500 | No | |
| Annual Catch-up Limit, Age 60-63 | $11,250 | $7,500 | Yes | |
| Annual Limit on Contributions (DC Plans) | $70,000 | $69,000 | Yes | |
| General Limits & Thresholds | HCE Prior Year Compensation Threshold | $160,000 | $155,000 | Yes |
| Key Employee Compensation Threshold | $230,000 | $220,000 | Yes | |
| Annual Compensation Limit | $350,000 | $345,000 | Yes | |
| ESOP Limits | Amount Balance Limit Subject to 5-Year Distribution Period | $1,415,000 | $1,380,000 | Yes |
| Incremental Amount Adding Additional Year(s) to 5-Year Distribution Period | $285,000 | $275,000 | Yes | |
| Maximum Withdrawal Amounts | Domestic Abuse Distribution | $10,300 | $10,000 | Yes |
| Withdrawal for Emergency Expenses | $1,000 | $1,000 | No | |
| Defined Benefit Plans | Annual Benefit Limit | $280,000 | $275,000 | Yes |
PBGC Premiums for Defined Benefit Pension Plans for 2025
| Premium | 2025 | 2024 | Change? | |
| Single Employer Plans | Flat Rate (Per Participant) | $106 | $101 | Yes |
| Variable Rate for $1,000 of Unfunded Vested Benefits |
$52 |
$52 |
No |
|
| Per Participant Variable Cap | $717 | $686 | Yes | |
| Multiemployer Plans (e.g., union) | Flat Rate (Per Participant) | $39 | $37 | Yes |
Deferred Compensation Limit Changes for 2025
| Provision | 2025 | 2024 | Change? | |
| 457(b) Plans | Annual Limit on Contributions | $23,500 | $23,000 | Yes |
| Annual Catch-up Limit | $7,500 | $7,500 | No | |
| 409A Deferred Compensation | Specified Employee Compensation Threshold | $230,000 | $220,000 | Yes |
| Involuntary Separation Pay Limit | $700,000 | $690,000 | Yes |
Health and Welfare Plan Changes for 2025
| Limitation | 2025 | 2024 | Change? | |
|
HDHP & HSA Limits
|
Annual Deductible – Minimum | $1,650/$3,300 | $1,600/$3,200 | Yes |
| Out-of-Pocket Expenses (HSA) – Maximum | $8,300/$16,600 | $8,050/$16,100 | Yes | |
| HSA Contribution Limit (Individual/Family) | $4,300/$8,550 | $4,150/$8,300 | Yes | |
| Catch-Up Limit | $1,000 | $1,000 | No | |
| Flexible Spending Account (FSA) | Health FSA – Employee Contribution Limit | $3,300 | $3,200 | Yes |
| Health FSA – Maximum Carryover | $660 | $640 | Yes | |
|
Dependent Care FSA – Employee Contribution Limit |
$5,000 married filing jointly or single
$2,500 married filing separately |
$5,000 married filing jointly or single
$2,500 married filing separately |
No |
Affordable Care Act (ACA) Changes for 2025
| Provision | 2025 | 2024 | Change? | |
| ACA Limits for Non-Grandfathered Health Plans | Out-of-Pocket Maximum (Individual/Family) | $9,200/$18,400 | $9,450/$18,900 | Yes |
| Embedded Individual Maximum within Family Coverage | $9,200 | $9,450 | Yes | |
| Affordability | 9.02% | 8.39% | Yes | |
| Penalties | No Offer of Coverage (Penalty A) | $2,900 | $2,970 | Yes |
| Coverage Fails Minimum Value or Affordability | $4,350 | $4,460 | Yes |
[1] Additional changes apply to SEPs and SIMPLEs that are not addressed in this alert.
