11/4/2023
Charles C. Shulman, Esq.
212-380-3834 201-357-0577
cshulman@ebeclaw.com
2024 BENEFIT PLAN COST-OF-LIVING ADJUSTMENTS (with SECURE 2.0 changes)
|
BENEFIT PLAN COST-OF-LIVING
ADJUSTMENTS |
2023 |
2024 |
|
Qualified Plan Adjustments |
||
|
402(g) Deferral Limit – Annual limit on pre-tax
salary deferrals to 401(k), 403(b) and 457(b) plans – IRC §§ 402(g)(1), 402(g)(3) & 457(e)(15) |
$22,500 |
$23,000 |
|
Age 50 Additional Catch-Up Deferrals – Age
50 & older “catch-up” deferrals beyond the 402(g) limit above available for
401(k), 403(b), & governmental 457(b) plans – IRC § 414(v)(2)(B)(i). |
$7,500 |
$7,500 |
|
DB Benefit Limit – Limit on annual benefits from
defined benefit plans – IRC §
415(b) |
$265,000 |
$275,000 |
|
DC Contribution Limit – Annual contribution limit
for defined contribution plans –
IRC § 415(c) |
$66,000 |
$69,000 |
|
Compensation Limit – Annual compensation limit
for qualified plans and SEPs – IRC
§§ 401(a)(17), 404(l) & 408(k) |
$330,000 |
$345,000 |
|
Grandfathered § 401(a)(17) annual compensation limit for
governmental plans in effect on July 1, 1993 – Treas. Reg. § 1.401(a)(17)-1(d)(4)(ii) |
$490,000 |
$505,000 |
|
Highly Compensated Employee - Highly compensated
employee threshold for nondiscrimination testing in the following year – IRC § 414(q)(1)(B) |
$150,000 |
$155,000 |
|
Key Employee Officers in Top Heavy Plan – Key
employee threshold for officers in top heavy plans – IRC § 416(i)(1)(A)(i) |
$215,000 |
$220,000 |
|
QLAC Limit – Limit on premiums for qualified
longevity annuity contracts (QLACs) under Treas. Reg. § 1.401(a)(9)-6 Q&A 17 increased from $150,000 to
$200,000 under SECURE 2.0 § 202 for contracts purchased or received on or
after Dec. 29, 2022 |
$200,000 |
$200,000 |
|
ESOP Distributions – (i) minimum account
balance allowing extension of distribution period beyond 5 years; and (ii)
dollar amount (or fraction) in excess of minimum account balance allowing
extension of distribution period for additional year – IRC § 409(o)(1)(C)(ii) |
(i) $1,330,000 (ii) $265,000 |
(i) $1,380,000 (i) $275,000 |
|
SEP & SIMPLE Adjustments |
||
|
SEP Earnings Level – Minimum earnings level to
qualify for Simplified Employee Pension (SEP) IRA – IRC § 408(k) |
$750 |
$750 |
|
SIMPLE Salary Deferral Limit – SIMPLE 401(k) or SIMPLE
IRA elective deferral limit – IRC
§ 408(p)(2)(E) (referenced by § 401(k)(11)(B)(i)(I)) |
$15,500 |
$16,000 |
|
SIMPLE Catch-Up for Age 50 – SIMPLE 401(k) or SIMPLE
IRA age 50 catch-up – IRC § 414(v)(2)(B)(ii). Under
SECURE 2.0 beginning in 2024 the SIMPLE catch-up is supposed to increase by
10%. Also, under SECURE 2.0 § 109 the catch-up for SIMPLE plans for
those ages 60-63 will be increased about 50% in 2025. |
$3,500 |
$3,500 |
|
Traditional IRA & Roth IRA Adjustments |
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|
IRA Limit – Traditional IRA and Roth IRA
contribution limit is indexed –
IRC §§ 219(b)(5)(A), 408(a)(1) & 408A(c)(2) |
$6,500 |
$7,000 |
|
Spousal IRA Contribution Limit – A
spousal IRA or spousal Roth IRA where both spouses contribute is double the
above. |
$13,000 |
$14,000 |
|
IRA Catch-up Contribution - Age 50 & older
“catch-up” for IRAs & Roth IRAs (not currently adjusted but under SECURE
2.0 § 108 will adjust beginning in 2025) – IRC § 219(b)(5) |
$1,000 |
$1,000 |
|
Phaseout where IRA Owner is also
Covered by an Employer Plan –
Adjusted gross income (AGI) phase-out of deductible contribution to IRA if individual
is also covered by employer-sponsored retirement plan for: (i) married filing
jointly, (ii) single or (iii) married filing separately – IRC
§ 219(g)(1)-(5) |
(i) $116,000 - $136,000, (ii) $73,000 - $83,000, (iii) 0 - $10,000 |
(i) $123,000 - $143,000,
(ii) $77,000 - $87,000, (iii) 0 - $10,000 |
|
Phaseout where Spouse of IRA Owner is
Covered by an Employer Plan –
AGI phase-out of deductible contribution to IRA if contributor is not covered
by an employer-sponsored plan but spouse is covered by an employer-sponsored
plan – IRC § 219(g)(7) |
$218,000 - $228,000 |
$230,000-$240,000 |
|
Phaseout of Roth IRA Contributions – AGI phase-out deduction for contributions to the Roth
IRA for (i) married filing
jointly, (ii) single or (iii) married filing separately – IRC § 408A(c)(3)(B) |
(i) $218,00 - $228,000, (ii) $138,000 - $153,000, (iii) 0 - $10,000 |
(i) $230,000 - $240,000,
(ii) $146,000 - $161,000, (iii) 0 - $10,000 |
|
Saver’s Credit – A “saver’s credit” under IRC § 25B(b) provides a
tax credit for salary deferrals to a 401(k) or 403(b) plan or contributions
to an IRA for those with AGI below a certain level, with a credit (for
married filing jointly) of (i) 50% of contribution if AGI is not more than a
specified dollar amount, (ii) 20% if AGI is in a specified dollar range and (iii)
10% if AGI is in higher specified dollar range. Single and married filing
separately have lower limits. (Effective for
plan years beginning 2027, SECURE 2.0 § 103 sunsets the § 25B saver’s credit and
replaces it with a federal matching contribution under IRC § 6433, which is 50%
of the contributions up to $2,000 per individual, but phases out if AGI is between
$41,000 and $71,000 for married filing jointly, and $20,500 to $35,500 for
single taxpayers and married filing separate returns.) |
(i) $43,500, (ii) $43,501-
$47,500, (iii) $47,501 - $73,000 |
(i) $46,000, (ii) $46,001-
$50,000, (iii) $50,001 - $76,500 |
|
PBGC Premium and Guaranty Adjustments |
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|
PBGC Flat-Rate Premium – PBGC flat-rate premium per participant for a
single-employer plan (under ERISA § 4006 & PBGC Premium Rates webpage) |
$96 |
$101 |
|
PBGC Variable-Rate Premium - PBGC variable-rate premium for single-employer
plans (i) per $1,000 of Unfunded Vested Benefits, and (ii) per participant
cap. SECURE
2.0 § 349 will increase in 2025 the variable rate $52 per participant x $1000
of UVBs so that the $52 amount is indexed for inflation. |
(i) $52 |
(i) $52 (ii) $686 |
|
Multiemployer Premium - PBGC premium for
multiemployer plan per participant |
$35 |
$37 |
|
PBGC Guaranteed Benefit - PBGC guaranteed benefits
under ERISA § 4022 where PBGC is the trustee (for annual single life annuity
beginning at age 65) |
$81,000 |
$85,295.40 ($7,107.95 a month) |
|
FSA, HRA, HSA, and ACA Adjustments |
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|
Health FSA Limit – Health FSA (flexible
spending account) limit – IRC
§ 125(i) |
$3,050 |
$3,200 |
|
Heath FSA Carryover – Health FSA carryover
amount |
$610 |
$640 |
|
HRA Contribution Limit – Health Reimbursement
Account (HRA) maximum employer contribution – Treas. Reg. § 54.9831-1(c)(3)(viii)(B) |
$1,950 |
$2,100 |
|
HSA Limit – Health Savings Account (HSA) deduction limit for
(i) single & (ii) family – IRC § 223(b)(2) |
(i) $3,850 (ii) $7,750 |
(i) $4,150 (ii) $8,300 |
|
HDHP Deductible – HDHP (with HSA) minimum
deductibles for (i) self-only or (ii) family coverage – IRC § 223(c) |
(i) $1,500 (ii) $3,000 |
(i) $1,600 (ii) $3,200 |
|
HDHP Out of Pocket – HDHP (with HSA) maximum
out-of-pocket amounts for (i) self-only & (ii) family coverage – IRC § 223(c) |
(i) $7,500 (ii) $15,000 |
(i) $8,050 (ii) $16,100 |
|
QSEHRA Limit – Qualified small employer HRA (QSEHRA)
for small business (less than 50 employees) and the maximum payments and
reimbursements (i) single coverage and (ii) family coverage – IRC § 9831(d) |
(i) $5,850 (ii) $11,800 |
(i) $6,150 (ii) $12,450 |
|
MSAs – Existing Archer Medical Savings Accounts have annual
deductible range (i) for single coverage & (ii) for family coverage, and
out-of-pocket maximum (iii) for single coverage and (iv) for family coverage –
IRC § 220(c)(2)(A) |
(i) $2,650 - $3,950, (ii) $5,300 - $7,900, (iii)
$5,300, |
(i) $2,800
- $4,150, |
|
ACA Out of Pocket Maximum – Affordable Care Act (ACA)
out-of-pocket maximum (cost-sharing) for non-grandfathered group health plans
for (i) self & (ii) family – 42 USC § 18022(c); 45 CFR § 156.130(a) |
(i) $9,100 (ii) $18,200 |
(i) $9,450 (ii) $18,900 |
|
ACA Affordability Rate – ACA health plan “affordability”
rate of pay (percentage of household income) for premium tax credit – IRC §
36B(c)(2)(C)(i)(II) |
9.12% |
8.50% |
|
ACA Pay or Play Penalties – ACA employer shared
responsibility assessments (i) if do not offer coverage to 95% of full-time
employee, penalty for each FTE; and (ii) if do offer coverage to 95% of FTEs
but is not “affordable” penalized only for employees who buy Marketplace
coverage and receive premium tax credit – IRC § 4980H |
(i) $2,880 (ii) $4,320 |
(i) $2,970 (ii) $4,460 |
|
Fringe Benefit Adjustments |
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|
Transportation Fringe – Qualified transportation &
parking benefit – IRC §
132(f)(2) |
$300 |
$315 |
|
Adoption – Adoption credit or exclusion from
income (i) amount and (ii) AGI phaseout – IRC §§ 23(a)(3) & 137(a)(2) |
(i) $15,950, |
(i) $16,810,
|
|
LTC Deduction Limit – Long-term care premium
deduction limits for individuals (i) age 40 or less, (ii) age 41-50, (iii)
age 51-60, (iv) age 61-70 and (v) over age 70 – IRC § 213(d)(10) |
(i) $480, (ii) $890, |
(i) $470,
(ii) $880, (iii) $1,760, (iv) $4,700 & (v) $5,880 |
|
Social Security Adjustments |
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|
Taxable Wage Base – the taxable wage base
subject to FICA (OASDI) tax (SSA Oct. 2023 COLA Fact Sheet) |
$160,200 |
$168,600 |
|
SS Tax up to Taxable Wage Base – Social
Security (OASDI) tax up to taxable wage base (double for self-employed) |
6.2% |
6.2% |
|
Medicare Tax – Medicare tax and no cap on wages (plus 0.9% Medicare tax for wages in excess of
$250,000 (joint filers) / $200,000 (single)) |
1.45% |
1.45% |
|
SS COLA – Social Security cost of living
increase |
8.7% |
3.2% |
|
Sample Penalty Adjustments |
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|
DOL Penalties – Sample DOL penalties per
day for |
(i) $164 |
TBA |
