BDO presents a highlights summary of the significant cost-of-living adjustments (COLA) effective for 2025. These adjustments recently announced by the Internal Revenue Service (IRS) and the Social Security Administration (SSA) have a wide-ranging impact, including the savings rate for retirement plans. All annual compensation amounts and limits for elective deferrals were increased, except for catch-up contribution limits. BDO will continue to provide updates on regulatory matters impacting retirement plans in the coming year – to sign up for BDO newsletters and other insights, visit the ERISA Center of Excellence.
Code Section | 2025 | 2024 | 2023 |
401(a)(17) /404(l) Annual Compensation | $350,000 | $345,000 | $330,000 |
402(g)(1) Elective Deferrals | $23,500 | $23,000 | $22,500 |
408(k)(2)(C) SEP Minimum Compensation | $750 | $750 | $750 |
408(k)(3)(C) SEP Maximum Compensation | $350,000 | $345,000 | $330,000 |
408(p)(2)(E) SIMPLE Maximum Contributions | $16,500 | $16,000 | $15,500 |
409(o)(1)(C)(ii) ESOP Limits | $1,415,000 | $1,380,000 | $1,330,000 |
$280,000 | $275,000 | $265,000 | |
414(q)(1)(B) HCE Threshold | $160,000 | $155,000 | $150,000 |
414(v)(2)(B)(i) Catch-up Contributions | $7,500 | $7,500 | $7,500 |
414(v)(2)(B)(ii) Catch-up Contributions | $3,500 | $3,500 | $3,500 |
415(b)(1)(A) DB Limits | $280,000 | $275,000 | $265,000 |
415(c)(1)(A) DC Limits | $70,000 | $69,000 | $66,000 |
416(i)(1)(A)(i) Key Employee | $230,000 | $220,000 | $215,000 |
457(e)(15) Deferral Limits | $23,500 | $23,000 | $22,500 |
1.61-21(f)(5)(i) Control Employee | $140,000 | $135,000 | $130,000 |
1.61-21(f)(5)(iii) Control Employee | $285,000 | $275,000 | $265,000 |
Taxable Wage Base for Social Security | $176,100 | $168,600 | $160,200 |
BDO works collaboratively with clients to test retirement plan limits while performing an audit of the qualified retirement plan. For more information about our ERISA audit services, plan administration and actuarial services, visit BDO’s Employee Benefit Plan Audits.