Complete Story
11/13/2024
IRS Announces New Retirement Plan Limits
Source: Fisher Phillips, November 12, 2024
Employees can contribute more pre-tax dollars next year to their retirement savings accounts, including 401(k) and 403(b) plans, according to an IRS announcement made on November 1. Your eligible workers will be able to defer up to $23,500 in 2025 – which is $500 more than the current 2024 limit. We want to remind you to consider taking these six steps as you prepare for the next plan year:
1. Update programs to ensure any plan materials and participant communications reflect the new limits.
2. Educate your employees on the new limits and give them an opportunity to boost their participation.
3. Communicate with your payroll department or provider, as well as your administrative services provider, to ensure the new limits are taken into account when determining contributions.
4. Train your payroll, benefits, and relevant human resources staff on these plan limit changes and ensure they know how these changes will impact plan administration.
5. Confirm that your retirement plans comply with the applicable limits when processing employee contributions and testing for discrimination issues, where applicable. Nondiscrimination testing is required for certain plans to ensure that highly compensated employees (HCE) do not disproportionately benefit from employer retirement plans and that contribution limits are not exceeded.
6. Keep written documentation on any plan updates, employee education and training, communications with third-party providers, and any other plan actions or decisions as part of your fiduciary responsibilities.
