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2025 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living

Notice 2024-80 Section 415 of the Internal Revenue Code (“Code”) provides for limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limitations for cost-of-living increases. Under section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act. Other amounts applicable to deferred compensation plans are also adjusted for cost-of-living increases using a variation of the methodology used for the adjustments under section 415(d). Cost-of-Living Adjusted Limitations for 2025 Effective January 1, 2025, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $275,000 to $280,000. For a participant who separated from service before January 1, 2025, the participant’s limitation under a defined benefit plan under section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2024, by 1.0262. The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2025 from $69,000 to $70,000. The Code provides that various other amounts are to be adjusted at the same time and in the same manner as the limitation of section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2025 are as follows: The limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3), which includes elective deferrals made to the Thrift Savings Plan, is increased from $23,000 to $23,500. The limitation on deferrals under section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $23,000 to $23,500. The limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) that generally applies for individuals aged 50 or over remains $7,500. The limitation under section 414(v)(2)(E)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) that applies for individuals who attain age 60, 61, 62, or 63 in