/>iOn November 1, 2024, the 2025 calendar year cost-of-living adjustments (COLAs) to the contribution and compensation limits for tax-qualified retirement plans were released by the Internal Revenue Service (IRS) in Notice 2024-80.
Quick Hits
- The elective deferral limit for 401(k) and 403(b) plans will increase to $23,500 for 2025, and the catch-up contribution limit will remain at $7,500 for most employees but will rise to $11,250 for employees who achieve ages 60 to 63 in 2025.
- The limitation on compensation that can be taken into account under tax-qualified retirement plans will increase to $350,000 for 2025.
- The threshold for determining highly compensated employees will increase to $160,000.
The 2025 adjustments were comparable to those made for 2024. The increases shown below are effective January 1, 2025.
| Internal Revenue Code (IRC) or Regulation Section | 2025 | 2024 |
| Annual compensation limit: IRC §§ 401(a)(17) / 404(l) | $350,000 | $345,000 |
| Elective deferral limit: IRC §§ 402(g)(1) and 457(e)(15) | $23,500 | $23,000 |
| Catch-up contribution limit: IRC § 414(v)(2)(B)(i) For employees ages 60-63: For other employees: | $11,250 $7,500 | N/A $7,500 |
| Defined benefit plan limit: IRC § 415(b)(1)(A) | $280,000 | $275,000 |
| Defined contribution plan limit: IRC § 415(c)(1)(A) | $70,000 | $66,000 |
| Highly compensated employee threshold: IRC § 414(q)(1)(B) | $160,000 | $155,000 |
| Employee stock ownership plan (ESOP) limits: IRC § 409(o)(1)(C) | $1,415,000 $280,000 | $1,380,000 $275,000 |
| Key employee dollar limit in top-heavy plan: IRC § 416(i)(1)(A)(i) | $230,000 | $220,000 |
| SIMPLE maximum contribution limit: IRC § 408(p)(2)(E) | $16,500 | $16,000 |
| SIMPLE catch-up contribution limit: IRC § 414(v)(2)(B)(ii) For employees ages 60-63: For all other employees: | $5,250 $3,500 | $3,500 |
| Simplified employee pension (SEP) minimum compensation: IRC § 408(k)(2)(C) | $750 | $750 |
| SEP maximum compensation: IRC § 408(k)(3)(C) | $350,000 | $345,000 |
| Control employee: § 1.61-21(f)(5)(i) | $140,000 | $135,000 |
| Control employee: § 1.61-21(f)(5)(iii) | $285,000 | $275,000 |
| Social Security taxable wage base | $176,100 | $168,600 |
The IRS makes cost-of-living adjustments annually in response to inflation. Each limit is rounded to a whole number, usually the nearest $500 or $1,000, as prescribed by the Employee Retirement Income Security Act (ERISA).
