2024 Will See Modest COLAs for Qualified Retirement Plans

Matthew Hoffman, Catherine Reese
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

On November 1, 2023, the 2024 calendar year cost-of-living adjustments to the contribution and compensation limits for tax-qualified retirement plans were released by the Internal Revenue Service (IRS) in Notice 2023-75.

Quick Hits

  • The elective deferral limit for 401(k) and 403(b) plans will increase to $23,000 for 2024, but the catch-up contribution limit remains at $7,500.
  • The annual contribution limit for defined contribution plans (including deferrals and employer contributions) will increase to $69,000 for 2024.
  • The limitation on compensation that can be taken into account under tax-qualified retirement plans will increase to $345,000 for 2024.

The 2024 adjustments, also known as COLAs, were modest compared to those made for 2023. Annual elective deferral limits will increase by only $500 and there is no increase for catch-up contributions. The increases shown below are effective January 1, 2024.

Internal Revenue Code (IRC) or Regulation Section 2024 2023
Annual compensation limit: IRC §§ 401(a)(17) / 404(l) $345,000 $330,000
Elective deferral limit: IRC §§ 402(g)(1) and 457(e)(15) $23,000 $22,500
Catch-up contribution limit: IRC § 414(v)(2)(B)(i) $7,500 $7,500
Defined benefit plan limit: IRC § 415(b)(1)(A) $275,000 $265,000
Defined contribution plan limit: IRC § 415(c)(1)(A) $69,000 $66,000
Highly compensated employee threshold: IRC § 414(q)(1)(B) $155,000 $150,000
Employee stock ownership plan (ESOP) limits: IRC § 409(o)(1)(C) $1,380,000 $275,000 $1,330,000 $265,000
Key employee dollar limit in top-heavy plan: IRC § 416(i)(1)(A)(i) $220,000 $215,000
SIMPLE maximum contribution limit: IRC § 408(p)(2)(E) $16,000 $15,500
SIMPLE catch-up contribution limit: IRC § 414(v)(2)(B)(ii) $3,500 $3,500
Simplified employee pension (SEP) minimum compensation: IRC § 408(k)(2)(C) $750 $750
SEP maximum compensation: IRC § 408(k)(3)(C) $345,000 $330,000
Control employee: § 1.61-21(f)(5)(i) $135,000 $130,000
Control employee: § 1.61-21(f)(5)(iii) $275,000 $265,000
Social Security taxable wage base $168,600 $160,200

The IRS makes cost-of-living adjustments annually in response to inflation. Each limit is rounded to a whole number, usually the nearest $500 or $1,000, as prescribed by statute.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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