On November 1, 2024, the Internal Revenue Service (IRS) announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2025.
There are eight significant changes that will take place for 2025:
- Annual elective deferrals limits for 401(k), 403(b) and 457 plans will increase from $23,000 to $23,500
- Enhanced Aged 60-63 Catch-Up Contributions limit is $11,250Annual Defined Contribution limit will increase from $69,000 to $70,000
- Defined Benefit maximum benefit limit will increase from $275,000 to $280,000
- Annual compensation limit will increase from $345,000 to $350,000
- Highly Compensated Employee limit will increase from $155,000 to $160,000
- Top Heavy Key Employee limit will increase from $220,000 to $230,000
- Social Security Wage Base limit will increase from $168,600 to $176,100
| COLA Increases for Dollar Limitations on Benefits and Contributions | ||||
| 2025 | 2024 | 2023 | 2022 | |
| 401(k), 403(b) and 457(b) Elective Deferrals | $23,500 | $23,000 | $22,500 | $20,500 |
| Age 50 Catch-Up Contributions | $7,500 | $7,500 | $7,500 | $6,500 |
| Enhanced Age 60-63 Catch-Up Contributions | $11,250 | N/A | N/A | N/A |
| Annual Contributions to DC Plans | $70,000 | $69,000 | $66,000 | $61,000 |
| Annual Benefits from DB Plans | $280,000 | $275,000 | $265,000 | $245,000 |
| Annual Compensation Limit | $350,000 | $345,000 | $330,000 | $305,000 |
| Highly Compensated Employee (HCE) | $160,000 | $155,000 | $150,000 | $135,000 |
| Top Heavy Key Employee – Officer Test | $230,000 | $220,000 | $215,000 | $200,000 |
| Social Security Taxable Wage Base | $176,100 | $168,600 | $160,200 | $147,000 |
Our Company
Snap TPA is a full service Third Party Administration firm (TPA). We provide business owners and corporations with custom Qualified Plan Design, Actuarial Calculations, Compliance Testing, Annual Administration and Consulting Services. We offer administration for all qualified retirement plans, including 401k, 403(b), Profit Sharing, Money Purchase, and Defined Benefit plans. Our goal is to make qualified retirement plans beneficial for businesses by providing cost-effective documents, consulting, and administrative services in line with your corporate retirement plan objectives.
Snap TPA is headquartered in New Jersey, but also has offices in Florida and Texas. We service a large and diverse client base throughout the country and offer customized solutions for every client. We deliver quality service with individual attention that results in business owners and their employees becoming more comfortable with the retirement plan being provided to them. Our team focuses on simplifying your plan’s establishment, annual reporting and on-going compliance needs. Our administrators have extensive experience in the retirement industry, several with over 25 years of experience and various industry certifications.