November 2023 Compliance News Article
2024 Dollar Limits
The contributions and retirement benefits for qualified retirement plans and Individual Retirement Arrangements (IRAs) are subject to certain limits that are adjusted by the Secretary of the Treasury annually for cost-of-living increases. Highlighted below are the various 2023 and 2024 limits that impact IRAs and retirement plans.
Compensation Limits
As in previous years, PBGC announced an increase to the flat and variable-rate premiums for plan years beginning in 2024. The table below highlights the changes from last year.
| Limit | 2023 | 2024 |
|---|---|---|
| Compensation Limit | $330,000 | $345,000 |
| Defined Contribution §415 Limit | $66,000 | $69,000 |
| Defined Benefit §415 Limit | $265,000 | $275,000 |
| Key Employee Officer | $215,000 | $220,000 |
| Highly Compensated Employee | $150,000 | $155,000 |
| Governmental Plan Compensation Limit | $490,000 | $505,000 |
| ESOP §409(o) Limits | $1,330,000 $265,000 |
$1,380,000 $275,000 |
Deferral and Catch-up Contribution Limits
| Limit | 2023 | 2024 |
|---|---|---|
| 401(k), 403(b), 457(b) Plan Deferral Limit | $22,500 | $23,000 |
| 401(k), 403(b), Governmental 457(b) Catch-up Limit | $7,500 | $7,500 |
| SIMPLE Plan Deferral Limit | $15,500 | $16,000 |
| SIMPLE Plan Catch-up Limit | $3,500 | $3,500 |
IRA Limits
The limit on contributions to a traditional or Roth IRA will increase to $7,000 in 2024, up from $6,500 in 2023. The limit that applies to IRA catch-up contributions (contributions for individuals age 50 and older) remains at $1,000.
Social Security
The Social Security Administration (SSA) announced an increase in the taxable wage base (TWB) for 2024 to $168,600 (was $160,200 in 2023). Workers pay Social Security tax on wages up to the TWB and some retirement plans use the TWB when allocating contributions or calculating benefits.
HSA Contribution Limits
Although not a formal retirement plan, health savings accounts (HSA) often factor into retirement savings. The IRS announced the following 2023 limits earlier this year. These apply to individuals under a high deductible health plan (HDHP). The minimum deductibles and maximum out-of-pocket expenses the IRS uses to define HDHPs are outlined below, as well.
| Limit | Individual | Family | ||
|---|---|---|---|---|
| 2023 | 2024 | 2023 | 2024 | |
| HSA Contribution Limits | $3,850 | $4,150 | $7,750 | $8,300 |
| Minimum Deductible for HDHPs | $1,500 | $1,600 | $3,000 | $3,200 |
| Maximum Out-of-Pocket Expenses | $7,500 | $8,050 | $15,000 | $16,100 |
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