Employee benefit plan and IRA cost-of-living adjustments: 2024 vs. 2025
The IRS recently issued Notice 2024-80 which announced the 2025 cost-of-living adjustments (COLA) limits. This quick reference table compares the COLA applicable to dollar limitations for various qualified retirement plans.
Plan sponsors should verify that their administrative and payroll systems reflect the appropriate limits. Review communications that specify benefit plan limits for accuracy before you give materials to participants.
2024 vs. 2025 comparison
|
2024 |
2025 |
|
|
Compensation limit (IRC Sec. 401(a)(17)) |
$345,000 |
$350,000 |
|
Defined benefit plan annual benefit limit |
$275,000 |
$280,000 |
|
Defined contribution plan annual contribution limit |
$69,000 |
$70,000 |
|
Social Security tax wage base |
$168,600 |
$176,100 |
|
Highly compensated employee compensation threshold |
$155,000 |
$160,000 |
|
Key employee officer compensation threshold |
$220,000 |
$230,000 |
|
SEP compensation threshold |
$750 |
$750 |
401(k), 403(b), 457(b) and SARSEPS
|
Elective deferral limit (2) |
$23,000 |
$23,500 |
|
Catch-up contribution (3) |
$7,500 |
$7,500 |
|
Age 60-63 catch-up contribution (4) |
N/A |
$11,250 |
SIMPLE plan
|
Elective deferral limit (2) |
$16,000 |
$16,500 |
|
Elective deferral limit (IRC §408(p)(2)(E)(i)(III) election) |
N/A |
$17,600 |
|
Catch-up contribution (3) |
$3,500 |
$3,500 |
|
Age 60-63 catch-up contribution (4) |
N/A |
$5,250 |
|
Additional nonelective contribution |
$5,000 |
$5,100 |
IRA
|
Contribution limit (2) |
$7,000 |
$7,000 |
|
Catch-up contribution (3) |
$1,000 |
$1,000 |
Traditional IRA deduction phaseout range (AGI)
|
Single, head of household — active participant |
$77,000-$87,000 |
$79,000-$89,000 |
|
Married filing separate — any spouse participates |
$0-$10,000 |
$0-$10,000 |
|
Married filing joint — nonparticipating spouse |
$230,000-$240,000 |
$236,000-$246,000 |
|
Married filing joint — participating spouse |
$123,000-$143,000 |
$126,000-$146,000 |
Roth IRA contribution eligibility phaseout range (AGI)
|
Married, filing joint |
$230,000-$240,000 |
$236,000-$246,000 |
|
Single, head of household |
$146,000-$161,000 |
$150,000-$165,000 |
|
Married filing separate — any spouse participates |
$0-$10,000 |
$0-$10,000 |
Retirement saver’s credit limitation (AGI)
|
Married, filing joint |
$76,500 |
$79,000 |
|
Head of household |
$57,375 |
$59,250 |
|
Married, filing separate, single |
$38,250 |
$39,500 |
- This table has been updated based on IRS Notice 2024-80, November 1, 2024.
- 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. However, deferrals to each SIMPLE plan in which the individual participates are also limited, as shown later in the table.
- Catch-up contributions are available each year to individuals who reach age 50 by December 31.
- Age 60-63 catch-up contributions are available each year to individuals who turn age 60, 61, 62 or 63 during the calendar year. Instead of the normal age 50+ catch-up contributions, these limits may apply. After age 63, catch-up contributions return to the normal catch-limit limits. Check with your payroll provider and retirement plan TPA if these limits apply to your plan.
How Wipfli can help
Wipfli’s employee benefit services practice is dedicated to helping clients meet their employee benefit needs. We’ve been providing qualified and nonqualified plan services for over 35 years.
For more information about the 2025 cost-of-living adjustments, or if you have any questions, please contact your Wipfli relationship executive or benefits consultant.
