Each fall, the Internal Revenue Service (IRS) reviews the contribution limitations for benefit plan contributions and other supporting factors based on inflationary increases and other factors. Several limits have been updated for 2024:
- For individual 401(k) participants, the maximum amount that can be contributed (pre-tax or after-tax Roth) to 401(k) plans has been increased to $23,000. This is an increase from $22,500 that was applicable for 2023. The total annual contribution to a 401(k) Plan increased from $61,000 to $66,000 when including all contribution types.
- The catch-up amount contribution limit remains at $7,500, for participants aged 50 and older. This means that a total of $30,500 can be contributed as an employee.
- The limit on compensation that can be included for benefit purposes was increased from $330,000 to $345,000.
- The annual amount used to determine a highly compensated employee for discrimination testing purposes was raised from $150,000 to $155,000.
- The dollar amount limitation concerning the definition of a “key employee” in a top-heavy plan was raised from $215,000 to $220,000.
Plan Sponsors should ensure those responsible for benefit administration within their companies are aware of these changes and the payroll and benefit systems are updated accordingly. For more information on this subject and to see additional benefit plan limit adjustments for other plan types, visit the IRS website at N-2022-55 (irs.gov).
For more information on how our 401(k) audit team can help, request a free consultation below or contact Kim Moore at (260) 918-8824 to discuss your unique 401(k) audit needs.
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