The Internal Revenue Service has announced the 2024 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans. The Social Security Administration (SSA) has also announced the taxable wage base for 2024:
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2024
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2023
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Elective Deferral Limit (401(k) & 403(b) Plans)
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$23,000
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$22,500
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Catch-Up Contributions (Age 50 and over)
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$7,500
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$7,500
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Annual Defined Contribution Limit
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$69,000
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$66,000
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Annual Compensation Limit
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$345,000
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$330,000
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Highly Compensated Employee Threshold
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$155,000
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$150,000
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Key Employee Compensation
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$220,000
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$215,000
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Social Security Wage Base
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$168,600
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$160,200
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Definitions
- Elective Deferral Limit means the maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).
- Catch-up Contributions refers to the additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits if permitted by the company’s retirement plan.
- Annual Contribution Limit means the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation and is applied to the combination of employee contributions, employer contributions, and forfeitures allocated to a participant's account.
- Annual Compensation Limit means the maximum compensation amount that can be considered in calculating contribution allocations and nondiscrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).
- Highly Compensated Employee Threshold means the minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).
- Social Security Wage Base is the maximum amount of earnings subject to Social Security payroll taxes.
