Employee benefit plan and IRA cost-of-living adjustments: 2023 vs. 2024
The IRS has issued Notice 2023-75, announcing the 2024 cost-of-living adjustment (COLA) limits. Wipfli has designed a quick reference table to assist you in comparing the COLA limits for different qualified retirement plans.
Important changes
The 2024 limits are determined based on the changes in the Consumer Price Index for All Urban Consumers (CPI-U) between the third quarter of 2022 and the third quarter of 2023. This year, the COLA limits had a modest increase following the historic 2023 hikes.
It’s important for plan sponsors to ensure that their administrative and payroll systems accurately reflect these limits. They also need to review the accuracy of any communications that outline the benefit plan limits before providing materials to participants.
2023 vs. 2024 comparison
|
2023 |
2024 |
|
|
Compensation limit — IRC Sec. 401(a)(17) |
$330,000 |
$345,000 |
|
Defined benefit plan annual benefit limit |
$265,000 |
$275,000 |
|
Defined contribution plan annual contribution limit |
$66,000 |
$69,000 |
|
Social Security tax wage base |
$160,200 |
$168,600 |
|
Highly compensated employee compensation threshold |
$150,000 |
$155,000 |
|
Key employee officer compensation threshold |
$215,000 |
$220,000 |
|
SEP compensation threshold |
$750 |
$750 |
|
401(k), 403(b), 457(b) and SARSEPS
|
||
|
Elective deferral limit (2) |
$22,500 |
$23,000 |
|
Catch-up contribution (3) |
$7,500 |
$7,500 |
|
SIMPLE plan
|
|
|
|
Elective deferral limit (2) |
$15,500 |
$16,000 |
|
Catch-up contribution (3) |
$3,500 |
$3,500 |
|
IRA
|
||
|
Contribution limit (2) |
$6,500 |
$7,000 |
|
Catch-up contribution (3) |
$1,000 |
$1,000 |
|
Traditional IRA deduction phaseout range (AGI)
|
|
|
|
Single, head of household — active participant |
$73,000-$83,000 |
$77,000-$87,000 |
|
Married filing separately — any spouse participates |
$0-$10,000 |
$0-$10,000 |
|
Married filing joint — nonparticipating spouse |
$218,000-$228,000 |
$230,000-$240,000 |
|
Married filing jointly — participating spouse |
$116,000-$136,000 |
$123,000-$143,000 |
|
ROTH IRA contribution eligibility phaseout range (AGI)
|
|
|
|
Married filing jointly |
$218,000-$228,000 |
$230,000-$240,000 |
|
Single, head of household |
$138,000-$153,000 |
$146,000-$161,000 |
|
Married filing separately — any spouse participates |
$0-$10,000 |
$0-$10,000 |
|
Retirement saver's credit limitation (AGI)
|
||
|
Married filing jointly |
$73,000 |
$76,500 |
|
Head of household |
$54,750 |
$57,375 |
|
Married filing separately, single |
$36,500 |
$38,250 |
(1) This table has been updated based on IRS Notice 2023-75, November 1, 2023.
(2) This applies to the total of all elective deferrals an individual makes for the year to 401(k) plans, 403(b) plans, SARSEPs and SIMPLE plans. There are also specific limitations on deferrals to each participating SIMPLE plan, as shown later in the table.
(3) Individuals who turn 50 by December 31 are eligible for catch-up contributions each year.
How Wipfli can help
Wipfli’s employee benefit services practice is a dedicated provider of independent consulting, recordkeeping and compliance services for employee benefits. With more than three decades of experience, we offer a comprehensive range of qualified and nonqualified plan services that can help meet your specific employee benefit requirements.
If you have questions or want to learn more about the 2024 cost-of-living adjustments, contact our team today.
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