The Internal Revenue Service imposes specific limitations on retirement plan compensation, allocations and funding. These limitations may be adjusted each year for the cost of living increases or decreases. The following table outlines the limitations for 2023 and 2024.
|
What is being Limited? |
What is it? |
Is this a calendar or plan year limit? |
2023 Limit |
2024 Limit |
|
Plan Compensation Limit |
This is the maximum compensation that can be considered when allocating Employer and Employee contributions. This limit is also considered when performing certain discrimination tests. |
Plan Year (use limit in effect at the beginning of the plan year) |
$345,000 |
$330,000 |
|
401(k) Deferral Limit |
This is the maximum deferral amount that an individual participant may defer. |
Calendar Year |
$23,000 |
$22,500 |
|
401(k) Catch-up Limit |
For participants age 50 and older this is the maximum additional amount that an individual may defer. |
Calendar Year |
$7,500 |
$7,500 |
|
Annual Addition Limit |
This is the maximum allocation limit that an individual participant may receive in a plan year from all money types. If applicable, this limit may be increased by any Catch-up contributions made in addition to the maximum 401(k) limit. |
Plan Year (use the limit in effect at the end of the plan year) |
Lesser of $69,000 or 100% of compensation |
Lesser of $66,000 or 100% of compensation |
|
Highly Compensated Employee (HCE) |
This is the annual compensation used to determine who will be considered a Highly Compensated Employee for the following plan year. Please note that 5% owners and their lineal dependents are always considered HCE’s. |
Plan Year |
$155,000 |
$150,000 |
|
Key Employee |
This is the annual compensation used to determine who will be considered a Key Employee for the year. The participant must also be considered an officer of the company. Please note that 1% owners earning over $150,000 and 5% owners and their lineal dependents are always considered Key Employees. |
Plan Year |
$220,000 |
$215,000 |
|
Taxable Wage Base |
This is the amount that is used in allocating an Employer Profit Sharing contribution if the plan allows for Permitted Disparity or Integration. This amount can be adjusted based on the Integration formula used. |
Plan Year (use the limit in effect at the end of the plan year) |
$168,600 |
$160,200 |