2025 Limits for Employee Benefit Plans

2025 LIMITS FOR EMPLOYEE BENEFIT PLANS Plus 6 Best Practices for Employers

Employees can contribute more pre-tax dollars next year to their retirement savings accounts, including 401(k) and 403(b) plans, according to an IRS announcement made on November 1. Your eligible workers will be able to defer up to $23,500 in 2025 – which is $500 more than the current 2024 limit. You can read more about the 2025 benefits limits for retirement and health savings plans on the next few pages — but before you flip the page, we want to remind you to consider taking these six steps as you prepare for the next plan year: Get Ready For The New Year Ahead

1. Update programs to ensure any plan materials and participant communications reflect the new limits.

2. Educate your employees on the new limits and give them an opportunity to boost their participation.

3. Communicate with your payroll department or provider, as well as your administrative services provider, to ensure the new limits are taken into account when determining contributions. 4. Train your payroll, benefits, and relevant human resources staff on these plan limit changes and ensure they know how these changes will impact plan administration. 5. Confirm that your retirement plans comply with the applicable limits when processing employee contributions and testing for discrimination issues, where applicable. Nondiscrimination testing is required for certain plans to ensure that highly compensated employees (HCE) do not disproportionately benefit from employer retirements plans and that contribution limits are not exceeded. 6. Keep written documentation on any plan updates, employee education and training, communications with third-party providers, and any other plan actions or decisions as part of your fiduciary responsibilities.

Retirement Plan Limits

2022

2023

2024

2025

Elective Salary Deferrals (401(k) & 403(b) & 457)

$20,500

$22,500

$23,000

$23,500

SIMPLE Employee Deferrals

$14,000

$15,500

$16,000

$16,500

Catch-Up Contribution (age 50 or older)

$6,500

$7,500

Higher Catch-Up Contribution for Employees Aged 60, 61, 62 and 63 SIMPLE Catch-Up Contributions (age 50 or older) Higher SIMPLE Catch-Up Contributions for Employees Aged 60, 61, 62 and 63 Maximum Compensation (includes maximum SEP compensation)

N/A

$11,250

$3,000

$3,500

N/A

$5,250

$305,000

$330,000

$345,000

$350,000

Maximum Benefit for Defined Benefit Plan

$245,000

$265,000

$275,000

$280,000

Maximum Annual Addition for Defined Contribution Plan

$61,000

$66,000

$69,000

$70,000

Pay Threshold to Determine HCE

$135,000

$150,000

$155,000

$160,000

Officer Pay Threshold To Determine Key Employee

$200,000

$215,000

$220,000

$230,000

Social Security Taxable Wage Base (OASDI)

$147,000

$160,200

$168,600

$176,100

SEP - Minimum Compensation

$650

$750

ESOP – Determining the Length of the General Five-Year Distribution Period ESOP – Maximum Account Balance subject to Five-Year Distribution Period

$245,000

$265,000

$275,000

$280,000

$1,230,000 $1,330,000 $1,380,000 $1,415,000

Health Plan Limits

2022

2023

2024

2025

High Deductible Health Plan – IRS limits for self/family annual deductible minimum

$1,400/ $2,800

$1,500/ $3,000

$1,600/ $3,200

$1,650/ $3,300

ACA out-of-pocket expenses - self/family maximum

$8,700/ $17,400

$9,100/ $18,200

$9,450/ $18,900

$9,200/ $18,400

HDHP maximum out-of-pocket amounts

$7,050/ $14,100

$7,500/ $15,000

$8,050/ $16,100

$8,300/ $16,600

HSA Contribution limit – individual/family

$3,650/ $7,300

$3,850/ $7,750

$4,150/ $8,300

$4,300/ $8,550

HSA Contribution catch-up (age 55 or older)

$1,000

FSA (flexible spending account – health)

$2,850

$3,050

$3,200

$3,300

FSA (flexible spending account – health carryover maximum)

$570

$610

$640

$660

$5,000 per household or $2,500 if married, filing separately

FSA (dependent care account)

Qualified Transportation Fringe Benefit (Transit pass, van pool, and qualified parking)

$280

$300

$315

$325

ACA affordability safe harbor

9.61%

9.12%

8.39%

9.02%

ACA penalties for no offer of coverage

$2,750

$2,880

$2,970

$2,900

ACA penalties when coverage offer lacks minimum value or affordability

$4,120

$4,320

$4,460

$4,350

Click here to learn more about the historical limits from 2019 to 2021.

Conclusion

If you have questions about benefits compliance, strategies, or best practices, feel free to reach out to your Fisher Phillips attorney, the author of this Insight, or any attorney in our Employee Benefits and Tax Practice Group. We will continue to provide tips, guidance, and updates on employee benefits and other workplace law topics, so make sure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information directly to your inbox.

Jennifer S. Kiesewetter

Of Counsel, Nashville/Memphis Member, Employee Benefits and Tax Practice Group jkiesewetter@fisherphillips.com

Katie Reynolds

Associate, Boston krreynolds@fisherphillips.com

2025 Employee Benefit Limits fisherphillips.com

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