The Internal Revenue Service has announced the 2024 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans. The Social Security Administration (SSA) has also announced the taxable wage base for 2024:
2024
2023
Elective Deferral Limit (401(k) & 403(b) Plans)
$23,000
$22,500
Catch-Up Contributions (Age 50 and over)
$7,500
$7,500
Annual Defined Contribution Limit
$69,000
$66,000
Annual Compensation Limit
$345,000
$330,000
Highly Compensated Employee Threshold
$155,000
$150,000
Key Employee Compensation
$220,000
$215,000
Social Security Wage Base
$168,600
$160,200
Definitions
Elective Deferral Limit: The maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).
Catch-up Contributions: The additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits if permitted by the company's retirement plan.
Annual Contribution Limit: the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation and is applied to the combination of employee contributions, employer contributions, and forfeitures allocated to a participant's account.
Annual Compensation Limit: The maximum compensation amount that can be considered in calculating contribution allocations and nondiscrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).
Highly Compensated Employee Threshold: The minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).
Social Security Wage Base: The maximum amount of earnings subject to Social Security payroll taxes.
