2024 Pension COLAs Announced

401(k), 403(b), 457(b) Pre-Tax Contribution Limit Increases to $23,000 for 2024
The IRS has announced the cost-of-living adjustments (COLAs) to the dollar limits on benefits and contributions under qualified retirement plans, as well as other items, for tax year 2024 [Notice 2023-75, 11-1-23]. The IRS notice is available on the PAYO website.

IRC §415, which provides for dollar limits on benefits and contributions under qualified retirement plans, requires that the IRS annually adjust these limits for cost-of-living changes. The IRC also requires various other amounts to be adjusted at the same time and in the same manner as these dollar limits.

• The limitation on the exclusion for elective deferrals under §402(g)(1) (e.g., §401(k) and §403(b) plans) increases to $23,000 (from $22,500).
• The limit on annual additions to defined contribution plans under §415(c)(1)(A) increases to $69,000 (from $66,000).
• The limit on the annual benefit under a defined benefit plan contained in §415(b)(1)(A) increases to $275,000 (from $265,000).
• The annual compensation limit under §401(a)(17), §404(l), §408(k)(3)(C), and §408(k)(6)(D)(ii) increases to $345,000 (from $330,000).
• The compensation amount under §408(p)(2)(E) regarding elective deferrals to SIMPLE retirement accounts increases to $16,000 (from $15,500).
• The limitation under §457(e)(15) concerning elective deferrals to deferred compensation plans of state and local governments and tax-exempt organizations (§457(b) plans) increases to $23,000 (from $22,500).
• The limitation under §416(i)(1)(A)(i) concerning the definition of "key employee" in a top-heavy plan increases to $220,000 (from $215,000).
• The limitation under §414(v)(2)(B)(i) for catch-up contributions to §§401(k), 403(b), and 457(b) plans for individuals age 50 or over remains $7,500; the limitation under §414(v)(2)(B)(ii) for catch-up contributions to an employer's SIMPLE plan for individuals age 50 or over remains $3,500.
• The limitation used in the definition of "highly compensated employee" under §414(q)(1)(B) increases to $155,000 (from $150,000).
• The annual compensation limit under §401(a)(17) for eligible participants in certain government plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limit under the plan under §401(a)(17) to be taken into account, increases to $505,000 (from $490,000).
• The compensation amount under §408(k)(2)(C) regarding simplified employee pensions (SEPs) remains $750.
• The compensation amount under Treas. Reg. §1.61-21(f)(5)(i), concerning the definition of "control employee" for fringe benefit valuation purposes, increases to $135,000 (from $130,000). The compensation amount under §1.61-21(f)(5)(iii) increases to $275,000 (from $265,000).
• The limit on annual contributions to an Individual Retirement Arrangement, increases to $7,000 (from $6,500). The additional catch-up contribution limit for individuals age 50 or over remains $1,000. The SECURE 2.0 Act amended the tax code to provide for annual cost of living adjustments for the over 50 catch-up limit, but the limit remained unchanged for 2024.