We are pleased to provide you with the recently released cost of living adjustments that affect the dollar limits for the retirement plans for the 2025 tax year. There are 3 items of particular note in the 2025 numbers:
- The increases to the dollars limits for retirement plans remain modest – $500 to the deferral limits for 401(k), 403(b), 457 and SIMPLE Plans. There was no increase to IRA limit.
- SECURE 2.0 added a change for plans allowing catch-up contributions for older employees – The catch-up deferral amount allowed for employees ages 50 plus remained at $7,500, however, employees in the specific age group of 60-63 will be subject to a catch-up limit of $11,250 if the employer allows catch-up contributions.
- While contribution increases remained modest, there was another significant increase to the Social Security Taxable Wage Base – from $168,600 to $176,100.
Please click here to get the complete chart of the 2024 and 2025 Retirement Plan Limits. You may also view the limits on our website at abghouston.com/limits/
Although not associated with the changing dollar limits, there are two addition changes employers need to monitor:
- Beginning in 2025 employers must allow Long Term Part Time Employees the option of deferring into 401(k), 403(b), 457 and SIMPLE Plans.
- If an employer established a new plan after December 29, 2022 auto-enrollment and auto escalation features must be added for the 2025 Plan Year.
Please email us at [email protected] or call us at (713) 690-9898 with any questions.
