FAQs
What is a “Qualified” Retirement Plan?
A “qualified” retirement plan is one that is described in Section 401(a) of the Internal Revenue Code. Simply, if a plan is not subject to the rules of Section 401(a), it is not a qualified plan. Common types of qualified plans are defined benefit plans, cash balance plans, money purchase plans and profit sharing (including 401(k)) plans.
Generally speaking, if a plan is qualified, contributions are not subject to tax until the money is withdrawn from the plan and any investment earnings from those contributions are tax-deferred as long as they remain in the plan. Furthermore, any contributions made by the Employer are tax deductible.
What is a Summary Plan Description?
A Summary Plan Description is a just that, a summary of the provisions of a plan. This document is prepared for distribution to all employees eligible to participate in the plan. It will include the major provisions of the plan, including but not limited to, vesting schedules for employer contributions, distribution rules, loan provisions (if applicable) and other rights and benefits under the plan.
FAQs
What is a “Qualified” Retirement Plan?
A “qualified” retirement plan is one that is described in Section 401(a) of the Internal Revenue Code. Simply, if a plan is not subject to the rules of Section 401(a), it is not a qualified plan. Common types of qualified plans are defined benefit plans, money purchase plans and profit sharing (including 401(k)) plans.
Generally speaking, if a plan is qualified, contributions are not subject to tax until the money is withdrawn from the plan and any investment earnings from those contributions are tax-deferred as long as they remain in the plan. Furthermore, any contributions made by the Employer are tax deductible.
What is a Summary Plan Description?
A Summary Plan Description is a just that, a summary of the provisions of a plan. This document is prepared for distribution to all employees eligible to participate in the plan. It will include the major provisions of the plan, including but not limited to, vesting schedules for employer contributions, distribution rules, loan provisions (if applicable) and other rights and benefits under the plan.
What are the Pension Plan Limitations for the current plan year and recent prior years?
| 2024 | 2023 | 2022 | 2021 | |
| PLAN LIMITATIONS | ||||
| 401(k) Elective Deferral Limitation (salary deferral) | $23,000 | $22,500 | $20,500 | $19,500 |
| Catch-up 401(k) Contribution Limitation for participants over 50 yrs old | $7,500 | $7,500 | $6,500 | $6,500 |
| Annual Defined Contribution (DC) Limitation (exclusive of catch-up) | $69,000 | $66,000 | $61,000 | $58,000 |
| Maximum Defined Benefit Plan Annual Benefit (IRC 415 (b)): Limitation (exclusive of catch-up) | $275,000 | $265,000 | $245,000 | $230,000 |
| Annual Limitation on Considered Compensation | $345,000 | $330,000 | $305,000 | $290,000 |
| Highly Compensated Employee Threshold for non-owners | $155,000 | $150,000 | $135,000 | $130,000 |
| Key Employee: Officer | $220,000 | $215,000 | $200,000 | $185,000 |
| Key Employee: 1% Owner | $150,000 | $150,000 | $150,000 | $150,000 |
| OTHER LIMITATIONS | ||||
| Social Security Wage Base | $168,600 | $160,200 | $147,000 | $142,800 |
| 403(b)/457 Elective Deferrals | $23,000 | $22,500 | $20,500 | $19,500 |
| SIMPLE Employee Deferrals | $16,000 | $15,500 | $14,000 | $13,500 |
| SIMPLE Catch-Up Deferral | $3,500 | $3,500 | $3,000 | $3,000 |
| 2020 | 2019 | 2018 | 2017 | |
| PLAN LIMITATIONS | ||||
| 401(k) Elective Deferral Limitation (salary deferral) | $19,500 | $19,000 | $18,500 | $18,000 |
| Catch-up 401(k) Contribution Limitation for participants over 50 yrs old | $6,500 | $6,000 | $6,000 | $6,000 |
| Annual Defined Contribution (DC) Limitation (exclusive of catch-up) | $57,000 | $56,000 | $55,000 | $54,000 |
| Maximum Defined Benefit Plan Annual Benefit (IRC 415 (b)): Limitation (exclusive of catch-up) | $230,000 | $225,000 | $220,000 | $215,000 |
| Annual Limitation on Considered Compensation | $285,000 | $280,000 | $275,000 | $270,000 |
| Highly Compensated Employee Threshold for non-owners | $130,000 | $125,000 | $120,000 | $120,000 |
| Key Employee: Officer | $185,000 | $180,000 | $175,000 | $175,000 |
| Key Employee: 1% Owner | $150,000 | $150,000 | $150,000 | $150,000 |
| OTHER LIMITATIONS | ||||
| Social Security Wage Base | $137,700 | $132,900 | $128,700 | $127,200 |
| 403(b)/457 Elective Deferrals | $19,500 | $19,000 | $18,500 | $18,000 |
| SIMPLE Employee Deferrals | $13,500 | $13,000 | $12,500 | $12,500 |
| SIMPLE Catch-Up Deferral | $3,000 | $3,000 | $3,000 | $3,000 |
| 2016 | 2015 | 2014 | 2013 | |
| PLAN LIMITATIONS | ||||
| 401(k) Elective Deferral Limitation (salary deferral) | $18,000 | $18,000 | $17,500 | $17,500 |
| Catch-up 401(k) Contribution Limitation for participants over 50 yrs old | $6,000 | $6,000 | $5,500 | $5,500 |
| Annual Defined Contribution (DC) Limitation (exclusive of catch-up) | $53,000 | $53,000 | $52,000 | $51,000 |
| Maximum Defined Benefit Plan Annual Benefit (IRC 415 (b)): Limitation (exclusive of catch-up) | $210,000 | $210,000 | $210,000 | $200,000 |
| Annual Limitation on Considered Compensation | $265,000 | $265,000 | $260,000 | $255,000 |
| Highly Compensated Employee Threshold for non-owners | $120,000 | $120,000 | $115,000 | $115,000 |
| Key Employee: Officer | $170,000 | $170,000 | $170,000 | $165,000 |
| Key Employee: 1% Owner | $150,000 | $150,000 | $150,000 | $150,000 |
| OTHER LIMITATIONS | ||||
| Social Security Wage Base | $118,500 | $118,500 | $117,000 | $113,700 |
| 403(b)/457 Elective Deferrals | $18,000 | $18,000 | $17,500 | $17,500 |
| SIMPLE Employee Deferrals | $12,500 | $12,500 | $12,000 | $12,000 |
| SIMPLE Catch-Up Deferral | $3,000 | $3,000 | $2,500 | $2,500 |
