IRS Releases 2025 Cost-of-Living Adjusted Limits for Benefit Plans
The Internal Revenue Service recently announced 2025 dollar limits for qualified retirement plans (including 401(k) plans), deferred compensation plans, and health and welfare plans. Adjustments to certain limits are based on a cost-of-living index.
In addition, the Social Security taxable wage base, which affects qualified retirement plans "integrated" with Social Security, typically adjusts each year. For 2025, the taxable wage base increases to $176,100.
For 2025, most limits increased with the exception of catch-up contribution limits and limits fixed by statute, the latter of which do not adjust based on the cost of living. The increased limits for 2025 are bolded in the tables below.
Qualified Retirement Plan Limits
|
|
2025 Limit |
2024 Limit |
|
Annual Limit on 401(k)/403(b) Deferral Contributions |
$23,500 |
$23,000 |
| Annual Limit on Age 50 and Older 401(k)/403(b) Catch-up Contributions | $7,500 | $7,500 |
| Annual Limit on Age 60-63 401(k)/403(b) Catch-up Contributions | $11,250 | (Not in effect prior to 2025) |
|
Annual Compensation Limit |
$350,000 |
$345,000 |
|
Annual Contribution Limit for Defined Contribution Plans |
$70,000 |
$69,000 |
|
Annual Benefit Limit for Defined Benefit Plans |
$280,000 |
$275,000 |
|
Prior Year Compensation Amount for Determining Highly Compensated Employees |
$160,000 |
$155,000 |
|
Key Employee Compensation Limit |
$230,000 |
$220,000 |
| Limit on Pension-Linked Emergency Savings Accounts (PLESAs) | $2,500 | $2,500 |
|
Annual Limit on SIMPLE Contributions |
$16,500 |
$16,000 |
| Annual Limit on Age 50 and Older Catch-up Contributions to SIMPLE Plans | $3,500 | $3,500 |
| Annual Limit on age 60-63 Catch-up Contributions to SIMPLE Plans | $5,250 | (Not in effect prior to 2025) |
|
ESOP Account Balance Limit Subject to 5-Year Distribution Period |
$1,415,000 |
$1,380,000 |
|
Incremental Amount Adding Additional Year(s) to ESOP 5-Year Distribution Period |
$285,000 |
$275,000 |
|
Earnings Threshold for SEP Contribution |
$750 |
$750 |
| Maximum Domestic Abuse Distribution | $10,300 | $10,000 |
| Maximum Withdrawal for Emergency Expenses | $1,000 | $1,000 |
Deferred Compensation Limits
|
|
2025 Limit |
2024 Limit |
|
Annual Limit on 457(b) Contributions |
$23,500 |
$23,000 |
|
Annual Limit on Catch-up Contributions to 457(b) Plans |
$7,500 |
$7,500 |
|
409A Specified Employee Compensation Threshold |
$230,000 |
$220,000 |
|
409A Involuntary Separation Pay Limit |
$700,000 |
$690,000 |
Health and Welfare Plan Limits
|
|
2025 Limit |
2024 Limit |
|
Annual Limit on Salary Reduction Contributions to Health FSA |
$3,300 |
$3,200 |
|
Annual Limit on Health FSA Carryover |
$660 |
$640 |
|
Annual Limit on Salary Reduction Contributions to Dependent Care FSA |
$5,000 if married filing jointly or if single $2,500 if married filing separately |
$5,000 if married filing jointly or if single $2,500 if married filing separately |
|
Annual Limit on HSA Contributions |
$4,300 (EE only) $8,550 (family) |
$4,150 (EE only) $8,300 (family) |
|
Annual Limit on Catch-up Contributions to HSA |
$1,000 |
$1,000 |
|
Annual Minimum Deductible for High Deductible Health Plans |
$1,650 (EE only) $3,300 (family) |
$1,600 (EE only) $3,200 (family) |
|
Annual Limit on High Deductible Health Plan Out-of-pocket Expenses |
$8,300 (EE only) $16,600 (family) |
$8,050 (EE only) $16,100 (family) |
If you have a question about any of these limits and how they apply, or any other employee benefits concerns, please reach out to one of the Davis Wright Tremaine benefits attorneys.