Cost of Living Adjustments for 2024

November 7, 2023

Save More for Retirement in 2024

On November 1, 2023, the IRS announced the Cost of Living Adjustments (COLAs) affecting the dollar limitations for retirement plans for 2024. In October, the Social Security Administration announced a modest benefit increase of 3.2%. Retirement plan limits also increased over the 2023 limits. COLA increases are intended to allow participant contributions and benefits to keep up with the “cost of living” from year to year. Here are the highlights from the new 2024 limits:

  • The calendar year elective deferral limit increased from $22,500 to $23,000.
  • The elective deferral catch-up contribution remains $7,500. This contribution is available to all participants aged 50 or older in 2024.
  • The maximum available dollar amount that can be contributed to a participant’s retirement account in a defined contribution plan increased from $66,000 to $69,000. The limit includes both employee and employer contributions as well as any allocated forfeitures. For those over age 50, the annual addition limit increases by $7,500 to include catch-up contributions.
  • The maximum amount of compensation that can be considered in retirement plan compliance has been raised from $330,000 to $345,000.
  • Annual income subject to Social Security taxation has increased from $160,200 to $168,600.
Annual Plan Limits202420232022
Contribution and Benefit Limits
Elective Deferral Limit$23,000$22,500$20,500
Catch-Up Contributions$7,500$7,500$6,500
Annual Contribution Limit$69,000$66,000$61,000
Annual Contribution Limit including Catch-Up Contributions$76,500$73,500$67,500
Annual Defined Benefit Limit$275,000$265,000$245,000
Compensation Limits
Maximum Plan Compensation$345,000$330,000$305,000
Income Subject to Social Security$168,600$160,200$147,000
Key EE Compensation Threshold$220,000$215,000$200,000
Highly Compensated EE Threshold$155,000$150,000$135,000
IRA Limits
SIMPLE Plan Elective Deferrals$16,000$15,500$14,000
SIMPLE Catch-Up Contributions$3,500$3,500$3,000
Individual Retirement Account (IRA)$7,000$6,500$6,000
IRA Catch-Up Contribution$1,000$1,000$1,000

This newsletter is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this newsletter without first seeking the advice of an independent tax advisor such as an attorney or CPA.

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