BizTech Law Blog

IRS Announces 2025 Cost-of-Living Adjustments for Retirement Plans and for Health and Welfare Benefit Plans

This blog has been updated since December 4, 2023. The data below is current.

The IRS has announced the 2025 cost-of-living adjustments for retirement plan and health and welfare benefit plan limitations. The charts below set forth the applicable limitations.

Retirement Plans

Similar to previous years, the IRS has again increased the limits for several retirement plan limits for 2025. The rows below represent some of the important changes. The changed limitations are between the 2024 limits and the 2025 limits.  

Retirement Plan Limitation	2024 Limit	2025 Limits
401(k) and 403(b) Employee Contribution Limit	$23,000	$23,500
"Catch-Up Contribution" Limit (age 50 and older)	$7,500	$7,500
Defined Contribution Maximum Contribution	$69,000 (plus “Catch-Up”)	$70,000 (plus “Catch-Up”)
Defined Benefit Annual Benefit Limit	$275,000	$280,000
Highly Compensated Employee Compensation	$155,000	$160,000
Top-Heavy Key Employee Officer Dollar Limit	$220,000	$230,000
Annual Compensation Limit	$345,000	$350,000
457(b) Plan Contribution Limit	$23,000	$23,500
Social Security Taxable Wage Base	$168,600	$176,100

In addition to the typical catch-up contribution limit that is permitted for individuals who are 50 years or older, the IRS announced limits for the “super” catch-up that was adopted as part of SECURE 2.0. Under the “super” catch-up rules, an individual between age 60 and 63 may contribute up to $11,250 (instead of $7,500). This additional catch-up limit is permitted for 401(k) plan, 457(b) plans, and 403(b) plans.

A complete explanation of all changes can be found in Notice 2024-80.

Health and Welfare Benefit Plans

The changes in limitations that apply to health and welfare plans have increased slightly for 2025. The following chart outlines the changes to these limits, but a full explanation can be found in Notice 2024-40.

Health and Welfare Benefit Plan Limitation	2024 Limit	2025 Limit
Health Flexible Spending Account (FSA) Contribution Limit	$3,200	$3,300
Health Savings Account (HSA) Contribution Limits -    Family -    Single -    Catch-Up Limit (age 55 and older)	$8,300 $4,150 $1,000	$8,550 $4,300 $1,000
HSA Annual Deduction Minimums -    Family -    Single	$3,200 $1,600	$3,300 $1,650
HSA Out-of-Pocket Maximums -    Family -    Single	$16,100 $8,050	$16,600 $8,300
Qualified Transportation Fringe Benefit Monthly Limits -    Qualified Parking -    Transit Pass/Vanpooling	$315 $315	$325 $325

The dependent care assistance limit remains at $5,000 and has not changed for a number of years.

If you have question related to these limits or how they affect the administration of your plan, please contact one of the authors of this article.

• Amanda Dernovshek…517.371.8259…adernovshek@fosterswift.com
• Julie Hamlet…616.796.2515…jhamlet@fosterswift.com
• Mindi Johnson…616.726.2252…mjohnson@fosterswift.com

Categories: Employee Benefits, Retirement