Following a year that saw record increases for qualified retirement plan limits, an early projection suggests that the limits will increase, but not quite as significantly as this year.
Using the Internal Revenue Code’s cost-of-living adjustment and rounding methods, the Consumer Price Index for All Urban Consumers (CPI-U) through July, and estimated CPI-U values for August and September, benefits consultant Mercer has projected that the contribution limits for 401(k), 403(b) and eligible 457 plan elective deferrals (and designated Roth contributions) will increase from $22,500 at present to $23,000 in 2024.
The 415(c) DC plan maximum annual addition is projected to increase from $66,000 to $68,000, and the 414(q)(1)(B) highly compensated employee and 414(q)(1)(C) top-paid group limit is projected to be $155,000 in 2024, compared with $150,000 for 2023. Mercer notes that the 415(c) limit could increase to $69,000 with significant inflation in August and September.
Other 2024 projected increases include:
- the 415(b) DB plan maximum annuity limit rising to $275,000 from $265,000;
- the 401(a)(17) and 408(k)(3)(C) compensation limit rising to $340,000 from $330,000 (this limit could increase to $345,000 with significant inflation in August and September); and
- the 416(i)(1)(A)(i) officer compensation for top-heavy plan key employee limit jumping to $220,000 from $215,000.
Only the 414(v)(2)(B)(i) catch-up contribution limit (for plans other than SIMPLE plans), which has a relatively large rounding value, is expected to stay the same next year at $7,500.
The 2024 limits will reflect increases in the CPI-U from the third quarter of 2022 to the third quarter of 2023. The figures cannot be finalized until after the September CPI-U values are published in October. The IRS typically announces official limits for the coming year in late October or early November.
Meanwhile, as NAPA has previously reported, separate estimates by The Senior Citizens League (TSCL) show that it’s looking more likely that next year’s annual Social Security cost-of-living adjustment (COLA) could be 3% next year, based on the July CPI data. That said, even though the rate of inflation in July is significantly lower than a year ago, the organization notes that most older Americans are reporting that persistently high prices still affect their household budgets.
