November 21, 2024

2024 End-of-Year Plan Sponsor “To Do” List (Part 2) Annual Cost of Living Adjustments

Allison Bans, Libby Brown, Nancy Campbell, Matthew Chiarello, Amberlee Conley, Greg Gautam, Jim Griffin, Sara Van Houten, Anne Meyer

Snell & Wilmer

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As is tradition, we are happy to present our End-of-Year Plan Sponsor “To Do” Lists. We are publishing our “To Do” Lists in four separate SW Benefits Updates. Part 1 covered year-end health and welfare plan issues. This Part 2 describes annual cost-of-living increases and includes a summary table of penalties, percentages, and premiums under the employer shared responsibility requirements of Code Section 4980H. Parts 3 and 4 will cover qualified plan and executive compensation issues. Each SW Benefits Update provides a checklist of items to consider before the end of 2024 or in early 2025.

As always, we appreciate your relationship with Snell & Wilmer and hope that these “To Do” Lists can help focus your efforts over the next few months.

Part 2 – Annual Cost of Living Adjustments “To Do” List

Qualified Retirement Plan Dollar Limits	2023	2024	2025
Limit on Section 401(k) Deferrals Section 402(g)	$22,500	$23,000	$23,500
Limit on Catch-up Contributions Section 414(v)(2)(B)(i)	$7,500	$7,500	$7,500
Special Limit on Catch-up Contributions for Individuals Who Attain Age 60-63 During Year Section 414(v)(2)(E)(i)	–	–	$11,250	Compensation Threshold for Required Roth Catch-up Contributions Section 414(v)(7)(A)	–	$145,000 in 2023¹	$145,000 in 2024¹
Limit on Deferrals for Government and Tax-Exempt Organization Deferred Compensation Plans Section 457(e)(15)	$22,500	$23,000	$23,500
Annual Benefit Limit for Defined Benefit Plans Section 415(b)(1)(A)	$265,000	$275,000	$280,000
Limit on Annual Contributions to Defined Contribution Plans Section 415(c)(1)(A)	$66,000	$69,000	$70,000
Limit on Compensation Considered by Qualified Retirement Plans Section 401(a)(17)	$330,000	$345,000	$350,000
Dollar Amount for the Definition of Highly Compensated Employee Section 414(q)(1)(B)	$150,000	$155,000	$160,000
Dollar Amount for the Definition of a Key Employee in a Top-Heavy Plan Section 416(i)(1)(A)(i)	$215,000	$220,000	$230,000
Dollar Amount for Determining the Maximum Account Balance in an ESOP Subject to Five-Year Distribution Period Section 409(o)(1)(C)(ii)	$1,330,000	$1,380,000	$1,415,000
SIMPLE Retirement Account Limitation Section 408(p)(2)(E)	$15,500	$16,000	$16,500
Social Security Taxable Wage Base	$160,200	$168,600	$176,100

Health & Welfare Plan Dollar Limits	2023	2024	2025
Annual Cost Sharing Limit (self-only)	$9,100	$9,450	$9,200
Annual Cost Sharing Limit (other than self-only)	$18,200	$18,900	$18,400
HDHP Out-of-Pocket Maximum (self-only)	$7,500	$8,050	$8,300
HDHP Out-of-Pocket Maximum (family)	$15,000	$16,100	$16,600
Annual HDHP Deductible (self-only)	Not less than $1,500	Not less than $1,600	Not less than $1,650
Annual HDHP Deductible (family)	Not less than $3,000	Not less than $3,200	Not less than $3,300
Maximum Annual HSA Contributions (self-only)	$3,850	$4,150	$4,300
Maximum Annual HSA Contributions (family)	$7,750	$8,300	$8,550
Maximum HSA Catch-Up Contribution	$1,000	$1,000	$1,000
Health Flexible Spending Account Maximum	$3,050	$3,200	$3,300

Code Section 4980H Amounts	2022	2023	2024	2025
Code Section 4980H(a) Penalty (95% Test)	$2,750 annual / $229.17 monthly	$2,880 annual / $240 monthly	$2,970 annual / $247.50 monthly	$2,900 annual / $241.67 monthly
Code Section 4980H(b) Penalty (Affordability)	$4,120 annual / $343.34 monthly	$4,320 annual / $360 monthly	$4,460 annual / $371.67 monthly	$4,350 annual / $362.50 monthly
Affordability Safe Harbor Percentage	9.61%	9.12%	8.39%	9.02%
Federal Poverty Level for 48 Contiguous United States	$13,590	$14,580	$15,060	To be announced in early 2025
Allowable Monthly Premium for Calendar Year Plans (Federal Poverty Level)	$12,880 x .0961/12 = $103.14 or $13,590 x .0961/12 = $108.83	$13,590 x .0912/12 = $103.28 or $14,580 x .0912/12 = $110.81	$14,580 x .0839/12 = $101.94 or $15,060 x .0839/12 =$105.29*	$15,060 x .0902/12 = $113.20 or $__ x .0902/12 =*

* Pending Updated Federal Poverty Level

Footnotes

Pursuant to IRS Notice 2023-62, the requirements of Code Section 414(v)(7)(A) will be treated as satisfied until taxable years beginning after December 31, 2025.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.