Update Applicable to:

All employers

What happened?

The Internal Revenue Service (IRS) announced on November 1, 2023, that the amount individuals can contribute to their 401(k) plans in 2024 has increased. This is effective January 1, 2024.

What are the details?

According to the notice given by the IRS:

• 401(k)/403b/457 limits increased by $500, from $22,500 in 2023 to $23,000 in 2024
  
• Individual Retirement Account (IRA) limits increased by $500 from $6,500 to $7,000
  
• Catch-up amounts stayed the same ($7,500 for 401k/403b/457, $1,000 for IRA)
  
• For the Savings Incentive Match Plan for Employees (SIMPLE), the amount individuals can contribute to their SIMPLE retirement accounts has increased to $16,000, from $15,500.

• For defined benefit plans, the limit on the annual benefit under this type of plan will increase to $275,000, from $265,000 in 2023.

Best practices

• Employers can review the following links and resources.
  • Law Firm Articles:
  Article 1, Article 2
  IRS Technical Guide Notice 2023-75
  IRS Official Release
  News Article
  IRS Individual Retirement Arrangements (IRAs)
  
• Employers can consider using the best practice guide by Fisher Phillips.
• Employers should also update their plan documents and communicate the changes to their employees.
  
• IRS Individual Retirement Arrangements (IRAs)

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