The IRS has announced the retirement plan limitations for 2025. Limitations which apply to Pension Plans (including Profit Sharing and 401(k) Plans) for the Year 2025 are:
| Annual Compensation Limit for Plan purposes | $350,000 (increased from $345,000) |
| Highly Compensated Employee Threshold | $160,000 (increased from $155,000) |
| Maximum Elective Deferrals for 401(k) | $23,500 (increased from $23,000) |
| Catch-Up Contributions for employees age 50+ | $7,500 (no change) |
| Catch-Up Contributions for employees ages 60-63 | $11,500 NEW FOR 2025 |
| Maximum Elective Deferrals for SIMPLE plans | $16,500 (increased from $16,000) |
| Catch-Up Contributions for employees age 50+ | $3,500 (no change) |
| Catch-Up Contributions for employees ages 60-63 | $5,250 NEW FOR 2025 |
| IRA or Roth IRA Limit | $7,000 (no change) |
| IRA or Roth IRA Catch-Up Limit | $1,000 (no change) |
| Social Security Taxable Wage Base | $176,100 (increased from $168,600 |
For clients with 401(k) and Profit Sharing Plans, the “maximum annual addition” to any participant for combined plans is $70,000 (increased from $69,000). Maximum annual additions do not include Catch-up Contributions.
401(K) CONTRIBUTIONS
The Department of Labor regulations provide that employee contributions (salary deferrals) made under 401(k) Plans must be contributed or deposited to the plan on the earliest date that they can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the participant contributions are withheld or received by the employer. The Safe Harbor available to small plans (Less than 100 participants) is 7 days. Please review your procedures to make sure you comply with this regulation.
Plan Administrators must provide 404a-5 Participant Level Fee Disclosures to participants when they are allowed to direct investments. The participant fee disclosure information must be given to eligible plan participants, beneficiaries of deceased participants and alternate payees under a QDRO who have account balances under the Plan. Eligible plan participants include all eligible Employees, whether or not they are actually deferring under a 401(k) plan.