2025 Will See COLAs for Qualified Retirement Plans Comparable to 2024
On November 1, 2024, the 2025 calendar year cost-of-living adjustments (COLAs) to the contribution and compensation limits for tax-qualified retirement plans were released by the Internal Revenue Service (IRS) in Notice 2024-80. Quick Hits The elective deferral limit for 401(k) and 403(b) plans will increase to $23,500 for 2025, and the catch-up contribution limit will remain at $7,500 for most employees but will rise to $11,250 for employees who achieve ages 60 to 63 in 2025. The limitation on compensation that can be taken into account under tax-qualified retirement plans will increase to $350,000 for 2025. The threshold for determining highly compensated employees will increase to $160,000. The 2025 adjustments were comparable to those made for 2024. The increases shown below are effective January 1, 2025. The IRS makes cost-of-living adjustments annually in response to inflation. Each limit is rounded to a whole number, usually the nearest $500 or $1,000, as presc...