RETIREMENT PLANS:
The IRS recently released Notice 2023-75 to announce cost-of-living adjustments to the indexed dollar limits applicable to retirement plans. Increases are more moderate than in recent years, with the limit on catch-up contributions remaining the same from 2023 to 2024. The chart below shows how the new limits compare to those for 2023.
|
TYPE OF LIMIT |
2024 |
2023 |
|
Defined Benefit Annual Benefit |
$275,000 |
$265,000 |
|
Defined Contribution Annual Contribution |
$69,000 |
$66,000 |
|
401(k)/403(b) Elective Deferrals |
$23,000 |
$22,500 |
|
Catch-Up Contributions |
No change |
$7,500 |
|
Annual Compensation |
$345,000 |
$330,000 |
|
"Key Employee" for Top-Heavy Plan |
$220,000 |
$215,000 |
|
"Highly Compensated Employee"1 |
$155,000 |
$150,000 |
|
Social Security Wage Base |
$168,600 |
$160,200 |
Notice 2023-75 also includes changes to other limits, including
increases that apply to employee stock ownership plans,
governmental plans, IRAs, and multiemployer plans, which are not
reflected in the chart above.
HEALTH & WELFARE PLANS:
The IRS has also released Rev. Proc. 2023-23, which provides the inflation-adjusted limits related to health savings accounts (HSAs) and high deductible health plans (HDHPs) for the 2024 calendar year. The chart below compares the 2024 and 2023 limits.
|
TYPE OF LIMIT |
2024 |
2023 |
|
HSA Annual Contribution Limit |
$4,150 (self only) |
$3,850 (self only) |
|
HSA Catch-Up |
No change |
$1,000 |
|
HDHP Minimum Annual Deductible |
$1,600 (self only) |
$1,500 (self only) |
|
HDHP Annual Out-of-Pocket Max |
$8,050 (self only) |
$7,500 (self only) |
|
Health Care FSA Annual Max Contribution* |
TBD |
$3,050 |
|
Health Care FSA Carryover Limit2* |
TBD |
$610 |
|
Dependent Care FSA Annual Max Contribution |
No change |
$5,000 (married or single employee) |
|
Qualified Transportation Fringe Benefit & Qualified Parking (monthly limit)3* |
TBD |
$300 |
Winston Takeaway: Plan sponsors should ensure the
increased dollar limits are appropriately reflected in their
payroll and plan administration programs for 2024 and included in
annual and other required communications to plan participants.
Footnotes
1. Whether an employee is a "highly compensated employee" in a given year is based on the employee's compensation earned during, and using the limit applicable for, the preceding year, so an individual will be a highly compensated employee in 2025 if he or she earns $155,000 in 2024.
2. New limits for 2024 are yet to be announced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
