On November 1, 2023, the Internal Revenue Service (IRS) announced the new contribution and benefit limits to qualified retirement plans. The increased limits will allow employees to save more money for retirement. Starting in 2024, the following limits apply:
- Employees can contribute up to $23,000 into their 401(k), 403(b) and most 457 plans. This constitutes an increase of $500 from the 2023 limits. This is a modest increase in the annual limit as compared to the $2,000 increase that occurred in 2023.
- The catch-up contribution limit for employees ages 50 and older who participate in 401(k), 403(b) and most 457 plans, will remain at $7,500, which is the same amount as in 2023. Thus, employees who are age 50 and older and participate in such defined contribution plans can contribute up to $30,500 ($23,000 plus $7,500).
- The combined limit on employer and employee contributions to defined contribution plans will increase from $66,000 to $69,000.
- The maximum annual benefit that a participant may receive under a defined benefit plan will be $275,000, up from $265,000.
- The maximum amount of annual compensation that may be taken into account on behalf of any participant under a qualified plan will increase from $330,000 to $345,000.
- The dollar threshold to identify “highly compensated employees” will increase from $150,000 to $155,000 (i.e., if compensation in 2024 is $155,000, that amount will determine highly compensated for determinations made in 2025).
- The limit on annual contributions to an Individual Retirement Account (IRA) will increase to $7,000, up from $6,500. The catch‑up contributions for individuals aged 50 and over will hold at $1,000 for 2024, allowing individuals aged 50 and above to contribute up to $8,000 to an IRA.
- The Social Security taxable wage base will increase from $160,200 to $168,600.
Plan sponsors should ensure that participant communications reflect the increased limits. Additional information regarding benefit plan dollar limits can be obtained in IRS Notice 2023-75.
Our Labor & Employment team will continue to monitor this development and is available to answer your questions.
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