November 4, 2024

2025 Qualified Plan Cost of Living Increases, 2025 Social Security Taxable Wage Base

Ruder Ware

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Ruder Ware

On November 1, 2024 the Internal Revenue Service announced the cost-of-living adjustments for the various qualified retirement plan limits. Almost all of the limits shown below have increased from last year.

Qualified Plan Limit	Cost-of-Living Adjustments
401(k) and 403(b) elective deferral limit	2024 – $23,000 2025 – $23,500
$200,000 compensation limit	2024 – $345,000 2025 – $350,000
$160,000 defined benefit limit	2024 – $275,000 2025 – $280,000
$40,000 defined contribution limit	2024 – $69,000 2025 – $70,000
$80,000 definition of highly compensated employee	2024 – $155, 000 2025 – $160,000
SIMPLE IRA deferral limit	2024 – $16,000 2025 – $16,500
Code Section 457 deferred compensation plan deferral limit	2024 – $23,000 2025 – $23,500
Code Section 414(v) catch-up contribution limit for employee deferrals	2024 – $7,500 2025 – $7,500
Code Section 414(v) increased catch-up contribution limit for employee deferrals (age 61 – 63 in 2025)	2025 – $11,250

All of the above are plan year limits (i.e., for the plan year which begins in 2025), with the exception of the Code Section 401(k) and Code Section 403(b) elective deferral limit, which is a calendar year limitation.

In addition, the Department of Health and Human Services has set the maximum taxable wages for the OASDI portion of the social security tax at $176,100 for 2025, which is an increase from the 2024 limit of $168,600.

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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.